Document:

Exhibit 4.1

 

EXECUTION COPY

 

SECTION 382 TAX BENEFITS PRESERVATION PLAN

 

by and between

 

CELADON GROUP, INC.

 

and

 

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

 

Dated as of August 9, 2018

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 1.
    	
 
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.
    	
 
    	
Appointment of Rights   Agent
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.
    	
 
    	
Issuance of Right   Certificates
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.
    	
 
    	
Form of Right   Certificates; Notice to Rights Agent as to Acquiring Person
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5.
    	
 
    	
Countersignature and   Registration
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.
    	
 
    	
Transfer, Split Up,   Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or   Stolen Right Certificates
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.
    	
 
    	
Exercise of Rights;   Purchase Price; Expiration Date of Rights
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.
    	
 
    	
Cancellation and   Destruction of Right Certificates
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.
    	
 
    	
Reservation and   Availability of Shares of Preferred Stock
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.
    	
 
    	
Securities Issuable Upon   Exercise
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.
    	
 
    	
Adjustments to Number   and Kind of Securities or Other Property, Number of Rights or Purchase Price
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 12.
    	
 
    	
Certification of   Adjustments
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13.
    	
 
    	
Fractional Rights and   Fractional Shares
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 14.
    	
 
    	
Rights of Action
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 15.
    	
 
    	
Agreement of Right   Holders
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 16.
    	
 
    	
Right Certificate   Holder Not Deemed a Stockholder
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
Section 17.
    	
 
    	
Concerning the Rights   Agent
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
Section 18.
    	
 
    	
Merger or Consolidation   or Change of Name of Rights Agent
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 19.
    	
 
    	
Duties of Rights Agent
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 20.
    	
 
    	
Change of Rights Agent
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 21.
    	
 
    	
Issuance of New Right   Certificates
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
Section 22.
    	
 
    	
Redemption
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
Section 23.
    	
 
    	
Exchange
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
Section 24.
    	
 
    	
Notice of Proposed   Actions
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
Section 25.
    	
 
    	
Notices
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
Section 26.
    	
 
    	
Supplements and   Amendments
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
Section 27.
    	
 
    	
Exemption Requests
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 28.
    	
 
    	
Successors
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 29.
    	
 
    	
Benefits of this   Agreement
    	
36
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 30.
    	
 
    	
Governing Law
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 31.
    	
 
    	
Counterparts
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 32.
    	
 
    	
Descriptive Headings
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 33.
    	
 
    	
Severability
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
Section 34.
    	
 
    	
Determination and   Actions by the Board, etc.
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
Section 35.
    	
 
    	
Force Majeure
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
Section 36.
    	
 
    	
Further Assurances
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A   — Form of Certificate of Designation of Series A Junior   Participating Preferred Stock
    	
 
    
	
 
    	
 
    
	
Exhibit B   — Form of Right Certificate
    	
 
    
	
 
    	
 
    
	
Exhibit C   — Form of Summary of Rights
    	
 
    

 

ii

 

SECTION 382 TAX BENEFITS PRESERVATION PLAN

 

SECTION 382 TAX BENEFITS PRESERVATION PLAN (this “Agreement”), dated as of August 9, 2018, between Celadon Group, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as rights agent (the “Rights Agent”).

 

RECITALS:

 

WHEREAS, the Company and certain of its Subsidiaries (as hereinafter defined) have generated certain Tax Benefits (as hereinafter defined) for United States federal income tax purposes which may potentially provide valuable benefits to the Company;

 

WHEREAS, if the Company experiences an “ownership change,” within the meaning of Section 382 (as hereinafter defined), and the Treasury Regulations (as hereinafter defined) promulgated thereunder, its ability to utilize such Tax Benefits could be substantially limited or lost altogether;

 

WHEREAS, the Company desires to avoid an “ownership change” and, thereby, preserve its ability to utilize its Tax Benefits;

 

WHEREAS, the Company believes that it is in the best interests of the Company and its stockholders that the Company provide for the protection of its Tax Benefits on the terms and conditions set forth herein; and

 

WHEREAS, in furtherance of the foregoing objectives, the Company desires to enter into this Agreement and, accordingly, on August 9, 2018, the Board of Directors of the Company (the “Board”) authorized and declared a dividend of one right (a “Right”) for each share of the Common Stock (as hereinafter defined) of the Company outstanding as of the Close of Business (as defined herein) on August 20, 2018 (the “Record Date”), each Right representing the right to purchase, upon the terms and subject to the conditions herein, one one-thousandth of a share of Preferred Stock (as defined below) of the Company (each one one-thousandth of a share of Preferred Stock, a “Unit”), and (ii) further authorized the issuance, upon the terms and subject to the conditions herein, of one Right with respect to each share of Common Stock of the Company that shall become outstanding between the Record Date and the earlier of the Distribution Date, the Expiration Date and the Final Expiration Date (each as defined herein) (or thereafter in accordance with Section 21 hereof).

 

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

 

Section 1.                                           Definitions.

 

For purposes of this Agreement, the following terms shall have the meanings indicated:

 

(a)                                 “Acquiring Person” means any Person who or which, together with all Affiliates and Associates of such Person, from and after the first public announcement by the Company of the adoption of this Agreement, is or becomes the Beneficial Owner of 4.99% or more

 

 

of the shares of Common Stock of the Company then outstanding, as calculated pursuant hereto, but shall not include:

 

(i)                   any Exempt Person;

 

(ii)                any “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii);

 

(iii)             any Existing Holder unless and until such Existing Holder acquires Beneficial Ownership of any additional shares of Common Stock of the Company after the first public announcement by the Company of the adoption of this Agreement (other than any increase pursuant to or as a result of (A) a stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company in which all registered holders of shares of Common Stock are treated substantially equally, (B) the grant or issuance by the Company to its directors, officers and employees of options, warrants, convertible instruments, rights or similar interests to acquire shares of Common Stock pursuant to any employee benefit plan, stock incentive plan, stock option plan or stock ownership plan of the Company adopted by the Board, and the subsequent vesting, exercise or conversion of such options, warrants, rights or similar interests, or (C) the grant or issuance by the Company to its directors, officers and employees of shares of restricted Common Stock or restricted stock units and the subsequent vesting of such shares or stock units, pursuant to a restricted stock or other benefits or compensation plan or arrangement adopted by the Board), unless upon acquiring Beneficial Ownership of such additional shares of Common Stock, such Existing Holder does not Beneficially Own 4.99% or more of the shares of Common Stock then outstanding;

 

(iv)            any Person who becomes the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding solely as a result of the initial grant or vesting of any options, warrants, rights or similar interests (including restricted shares and restricted stock units) by the Company to its directors, officers and employees pursuant to any employee benefit or stock ownership plan of the Company, or the acquisition of shares of Common Stock of the Company upon the exercise or conversion of any such securities so granted;

 

(v)               any Person who as the result of an acquisition of shares of Common Stock by the Company (or 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 for or pursuant to the terms of any such plan) which, by reducing the number of shares of Common Stock of the Company outstanding, increases the proportionate number of shares of Common Stock of the Company Beneficially Owned by such Person to 4.99% or more of the shares of Common Stock of the Company then outstanding; provided, however, that, if a Person shall become the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding by reason of acquisition of shares by the Company (or 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 for or pursuant to the terms of any such plan) and shall, after the first public announcement by the Company of such share acquisitions by the Company (or 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 for or pursuant to the terms of any such plan), become the Beneficial Owner of

 

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any additional shares (other than pursuant to a stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company) of Common Stock of the Company and immediately thereafter is the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding, then such Person shall be an Acquiring Person; or

 

(vi)            any Person who or which, within ten (10) Business Days of being requested by the Company to advise it regarding the same, certifies to the Company that such Person had become the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding inadvertently (including, without limitation, because (A) such Person was unaware that it Beneficially Owned a percentage of Common Stock that would otherwise cause such Person to be an “Acquiring Person,” or (B) such Person was aware of the extent of its Beneficial Ownership of Common Stock, but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement), and who or which thereafter within ten (10) Business Days following such certification reduces such Person’s Beneficial Ownership to less than 4.99% of the shares of Common Stock then outstanding; provided, however, that (x) if the Person requested to so certify fails to do so within ten (10) Business Days or breaches or violates such certification, then such Person shall become an Acquiring Person immediately after such ten (10) Business Day period or such breach or violation or (y) if the Person fails to reduce Beneficial Ownership to less than 4.99% within ten (10) Business Days following such certification, then such Person shall become an Acquiring Person immediately after such ten (10) Business Day period;

 

provided, however, that no Person shall be an Acquiring Person if the Board shall have affirmatively determined, in its sole discretion, prior to or after the Distribution Date, in light of the intent and purposes of this Agreement or other circumstances facing the Company, that such Person shall not be deemed an Acquiring Person, unless and until such Person shall again become an Acquiring Person.

 

In determining whether a Person owns 4.99% or more of the shares of Common Stock of the Company then outstanding, for all purposes of this Agreement, all of the Common Stock of the Company Beneficially Owned by such Person shall be taken into account in the numerator and, for purposes of the denominator, any calculation of the number of shares of Common Stock outstanding at any particular time shall be made pursuant to and in accordance with Section 382 and the Treasury Regulations promulgated thereunder. Without limiting the foregoing, any Person (other than a “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii)) shall be treated as the Beneficial Owner of 4.99% or more shares of the Common Stock of the Company then outstanding if, in the determination of the Board, that Person would be treated as a “5-percent stockholder” for purposes of Section 382 (substituting “4.99” for “5” each time “five” or “5” is used in or for purposes of Section 382). Notwithstanding anything to the contrary set forth herein, any shares of Common Stock of which a Person or any Affiliate or Associate of such Person becomes the Beneficial Owner pursuant to an equity compensation award granted to such Person by the Company or as a result of an adjustment by the Company to the number of shares of Common Stock represented by such equity compensation award pursuant to the terms thereof shall, solely for purposes of determining the number of shares of Common Stock of which such Person or any Affiliate or Associate of such Person is the Beneficial Owner at any time, not be included in the calculation of the number of shares of Common Stock outstanding.

 

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(b)                                 “Adjustment Shares” shall have the meaning set forth in Section 11(a)(ii).

 

(c)                                  “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement, and to the extent not included within the foregoing clause of this Section 1(c), shall also include, with respect to any Person (other than an Exempt Person or an Existing Holder), any other Person whose Common Stock would be deemed constructively or otherwise owned by, or otherwise aggregated with shares owned by, such first Person or owned by a single “entity” pursuant to the provisions of Section 382; provided, however, that a Person will not be deemed to be the Affiliate or Associate of another Person solely because either or both Persons are or were directors of the Company.

 

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

 

(i)                               which such Person or any of such Person’s Affiliates or Associates (A) directly or indirectly has the right to vote or dispose of, alone or in concert with others, or (B) is deemed to beneficially own, directly or indirectly, within the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement, including, with respect to both clause (A) and clause (B), pursuant to any agreement, arrangement or understanding (whether or not in writing), but only if the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, securities (including rights, options or warrants) which are convertible or exchangeable into or exercisable for Common Stock, except to the extent the acquisition or transfer of such rights, options or warrants would reasonably be expected to result in the rights, options or warrants being treated as exercised on the date of their acquisition or transfer under Section 382;

 

(ii)                            which such Person or any of such Person’s Affiliates or Associates owns, directly or indirectly, or has the legal, equitable or contractual right to acquire (whether directly or indirectly and whether such right is exercisable immediately, or only after the passage of time, compliance with regulatory requirements, the fulfillment of a condition, or otherwise) pursuant to any agreement, arrangement or understanding, 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 conversion rights, exchange rights, warrants, options, or other rights (including, without limitation, within the meaning of Section 382) or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) any shares of Common Stock by virtue of owning securities or other interests (including rights, options or warrants) that are convertible or exchangeable into, or exercisable for, such shares of Common Stock, except to the extent that upon the issuance, acquisition or transfer of such securities or other interests, such securities or other interests would be treated as exercised under Section 1.382-4(d) or other applicable sections of the Treasury Regulations, (B) securities tendered pursuant to a tender offer or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange or (C) securities issuable upon the exercise or exchange of Rights;

 

4

 

(iii)                         which are owned, directly or indirectly, by any other Person, 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 for the purpose of acquiring, holding, voting or disposing of any securities of the Company, but only if the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations;  or

 

(iv)                        to the extent not included within the foregoing provisions of this Section, a Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” or have “beneficial ownership” of securities, if such Person would be deemed to constructively own such securities pursuant to Sections 1.382-2T(h) and 1.382-4(d) of the Treasury Regulations, such Person owns such securities pursuant to a “coordinated acquisition” treated as a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or such securities are otherwise aggregated with securities owned by such Person, pursuant to the provisions of Section 382;

 

provided, however, that (i) a Person will 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 or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by means of a solicitation statement filed on Schedule 14A, and (2) is not also then reportable on Schedule 13D 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; (ii) nothing in this definition will 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 an underwriting syndicate until the expiration of forty (40) calendar days after the date of such acquisition, or such later date as the Board may determine in any specific case; (iii) notwithstanding anything in this Agreement to the contrary, a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any securities if (A) such securities would not be deemed constructively or otherwise owned by, or otherwise aggregated with securities owned by, such Person, and (B) such securities would not be deemed constructively or otherwise owned by a single “entity,” in each case, for purposes of Section 382; (iv) no Person who is an officer, director or employee of an Exempt Person shall be deemed, solely by reason of such Person’s status or authority as such, to be the “Beneficial Owner” of, to have “Beneficial Ownership” of or to “Beneficially Own” any securities that are “Beneficially Owned,” including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director or employee of an Exempt Person; and (v) a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own any securities which such Person or any of such Person’s Affiliates or Associates would otherwise be deemed to Beneficially Own pursuant to this Section 1(d) solely as a result of any merger or other acquisition agreement between the Company and such Person (or one or more of such Person’s Affiliates or Associates), or any tender, voting or support agreement entered into by such Person (or one or more of such Person’s Affiliates or Associates) in connection therewith, if, prior to such Person becoming an Acquiring Person, the Board has approved such merger or other acquisition agreement and any such tender, voting or support agreement entered into in connection therewith.

 

(e)                                  “Board” shall have the meaning set forth in the recitals.

 

5

 

(f)                                   “Book Entry Shares” shall have the meaning set forth in Section 3(a).

 

(g)                                  “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 of Indiana are authorized or obligated by law or executive order to close.

 

(h)                                 “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.

 

(i)                                     “Code” shall mean the Internal Revenue Code of 1986 as amended.

 

(j)                                    “Common Stock,” when used with reference to the Company, shall mean the common stock (presently $0.033 par value per share) of the Company.  “Common Stock,” when used with reference to any Person other than the Company, shall mean shares of the capital stock with the greatest voting power of such other Person or, if such other Person is a subsidiary of another Person, the entity which ultimately controls such first-mentioned Person.  “Common Stock,” when used with reference to any Person not organized in corporate form, shall mean units of beneficial interest which (x) 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 (y) are entitled to exercise the greatest voting power of such Person or, in the case of a limited partnership, have the power to remove the general partner or partners.

 

(k)                                 “Company” shall have the meaning set forth in the preamble.

 

(l)                                     “Current Market Price” shall have the meaning set forth in Section 11(d).

 

(m)                             “Current Value” shall have the meaning set forth in Section 11(a)(iii).

 

(n)                                 “Distribution Date” shall mean the Close of Business on the earlier to occur of (i) the tenth (10th) calendar day after the Stock Acquisition Date (or, if the tenth (10th) calendar day after the Stock Acquisition Date occurs before the Record Date, then the Close of Business on the Record Date), or (ii) the tenth (10th) calendar day after the date of the commencement (within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act) by any Person (other than an Exempt Person) of, or first public announcement of the intent of any Person (other than an Exempt Person) to commence, a tender or exchange offer, upon the successful consummation of which any Person (other than an Exempt Person) would become an Acquiring Person, irrespective of whether any shares are actually purchased or exchanged pursuant to such offer; provided, however, that if a tender or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender or exchange offer. Prior to the occurrence of a Distribution Date specified as a result of an event described in clause (i) or (ii) of the preceding sentence (or such later Distribution Date as the Board may select pursuant to this sentence), the Board may postpone, one or more times, the Distribution Date which would occur as a result of an event described in clause (i) or (ii) of the preceding sentence.

 

6

 

(o)                                 “Equivalent Preferred Securities” shall have the meaning set forth in Section 11(b).

 

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

 

(q)                                 “Excess Exchange Shares” shall have the meaning set forth in Section 23.

 

(r)                                    “Exempt Person” shall mean (i) the Company or any Subsidiary of the Company, in each case including, without limitation, the officers and members of the board of directors thereof acting solely in their fiduciary capacity, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any entity or trustee organized, appointed, established or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan, or for the purpose of funding other employee benefits for employees of the Company or any Subsidiary of the Company, (iii) any Person who the Board determines, in its sole discretion, prior to the time such Person would otherwise be an Acquiring Person, should be permitted to become the Beneficial Owner of up to a number or percentage of the shares of Common Stock determined by the Board (the “Exempted Amount”) and be exempted from being an Acquiring Person, unless and until such Person acquires Beneficial Ownership of shares of Common Stock of the Company in excess of the Exempted Amount (other than pursuant to a stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company) in which case such Person shall be an Acquiring Person; provided, however, that the Board may make such exemption subject to such conditions, if any, which the Board may determine, and (iv) any Person who is a transferee from the estate of an Exempt Person and who receives Common Stock of the Company as a bequest or inheritance from such Exempt Person, but only for so long as such transferee continues to be the Beneficial Owner of 4.99% or more of the then outstanding shares of Common Stock of the Company.

 

(s)                                   “Existing Holder” shall mean any Person who, immediately prior to the first public announcement of the adoption of this Agreement by the Company, is the Beneficial Owner of 4.99% or more of the Common Stock then outstanding.

 

(t)                                    “Expiration Date” shall mean the earliest of (i) the date on which all of the Rights are redeemed as provided in Section 22, (ii) the date on which the Rights are exchanged as provided in Section 23, (iii) the consummation of a reorganization transaction entered into by the Company resulting in the imposition of stock transfer restrictions that the Board, in its sole discretion, determines will provide protection for the Company’s Tax Benefits similar to that provided by this Agreement, (iv) the Close of Business on the effective date of the repeal of Section 382 (but excluding the repeal or withdrawal of any Treasury Regulations thereunder), or any other change, if the Board determines, in its sole discretion, that this Agreement is no longer necessary or desirable for the preservation of Tax Benefits, (v) the date on which the Board otherwise determines, in its sole discretion, that this Agreement is no longer necessary to preserve the Tax Benefits, (vi) the beginning of a taxable year of the Company to which the Board determines, in its sole discretion, that no Tax Benefits may be carried forward, and (vii) a determination by the Board, in its sole discretion, prior to the time any Person becomes an Acquiring Person, that this Agreement and the Rights are no longer in the best interests of the Company and its stockholders.

 

(u)                                 “Final Expiration Date” shall mean August 9, 2021.

 

7

 

(v)                                 “General Rules and Regulations” shall mean Part 240, Subpart A—Rules and Regulations under the Exchange Act.

 

(w)                               “NASDAQ” shall mean the NASDAQ Stock Market or any of its listing venues.

 

(x)                                 “NYSE” shall mean the New York Stock Exchange.

 

(y)                                 “Person” shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, association, trust, syndicate or other entity, or any group of persons making a “coordinated acquisition” of shares of Common Stock or otherwise treated as an entity within the meaning of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise for purposes of Section 382, or any successor provision or replacement provision, and includes any successor (by merger or otherwise) of such individual or entity.

 

(z)                                  “Preferred Stock” shall mean shares of Series A Junior Participating Preferred Stock, par value $1.00 per share, of the Company having the voting powers, designations, preferences and relative rights described in the Certificate of Designation, Preferences and Rights set forth in Exhibit A hereto, and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of preferred stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating Preferred Stock.

 

(aa)                          “Purchase Price” shall have the meaning set forth in Section 7(b).

 

(bb)                          “Record Date” shall have the meaning set forth in the recitals.

 

(cc)                            “Redemption Period” shall have the meaning set forth in Section 22(a).

 

(dd)                          “Redemption Price” shall have the meaning set forth in Section 22(a).

 

(ee)                            “Right” shall have the meaning set forth in the recitals.

 

(ff)                              “Rights Agent” shall have the meaning set forth in the preamble.

 

(gg)                            “Right Certificate” shall have the meaning set forth in Section 3(a).

 

(hh)                          “SEC” shall mean the U.S. Securities and Exchange Commission and any successor agency or instrumentality of the United States government.

 

(ii)                                  “Section 11(a)(ii) Event” shall have the meaning set forth in Section 11(a)(ii).

 

(jj)                                “Section 382” shall mean Section 382 of the Code and the Treasury Regulations promulgated thereunder.

 

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

 

(ll)                                  “Share Equivalents” shall have the meaning set forth in Section 11(a)(iii).

 

8

 

(mm)                  “Stock Acquisition Date” shall mean the first date of a public announcement (which, for purposes of this definition, shall include, without limitation, the filing of a report or an amendment thereto pursuant to Section 13(d) or Section 13(g) of the Exchange Act or pursuant to a comparable successor statute) by the Company or an Acquiring Person indicating that an Acquiring Person has become such or that discloses information which reveals the existence of an Acquiring Person; provided that, if such Person is determined by the Board, in its sole discretion, not to be or have become an Acquiring Person, then no Stock Acquisition Date shall be deemed to have occurred.

 

(nn)                          “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 or appoint a majority of the board of directors or other persons performing similar functions are Beneficially Owned, directly or indirectly, by such Person and any corporation or other entity that is otherwise controlled by such Person.

 

(oo)                          “Substitution Period” shall have the meaning set forth in Section 11(a)(iii).

 

(pp)                          “Summary of Rights” shall have the meaning set forth in Section 3(b).

 

(qq)                          “Tax Benefits” shall mean the net operating loss carryforwards, capital loss carryforwards, general business credit carryforwards, alternative minimum tax credit carryforwards and foreign tax credit carryforwards, as well as any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, and the Treasury Regulations promulgated thereunder, of the Company or any direct or indirect Subsidiary thereof.

 

(rr)                                “Trading Day” shall mean a day on which the principal national securities exchange on which the shares of such stock or units of other securities are listed or admitted to trading is open for the transaction of business or, if the shares of such stock or other units of such security are not listed or admitted to trading on any national securities exchange, a Business Day; provided, that if such security is not listed or quoted on the NYSE or NASDAQ and the principal market for such security is a non-U.S. securities exchange, then “Trading Day” shall mean a day on which such non-U.S. securities exchange is open for the transaction of business.

 

(ss)                              “Treasury Regulations” shall mean final and temporary (but not proposed) regulations of the U.S. Department of the Treasury promulgated under the Code, as such regulations may be amended from time to time.

 

(tt)                                “Triggering Event” shall mean any Section 11(a)(ii) Event.

 

(uu)                          “Trust” shall have the meaning set forth in Section 23(a).

 

(vv)                          “Trust Agreement” shall have the meaning set forth in Section 23(a).

 

(ww)                      “Unit” shall have the meaning set forth in the recitals.

 

Section 2.                                           Appointment of Rights Agent.  The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions of this Agreement (and no implied terms and conditions), and the Rights Agent hereby accepts this

 

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appointment.  The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable, upon ten (10) calendar days’ prior written notice to the Rights Agent.  In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agents and any co-Rights Agents shall be as the Company shall determine and the Company shall promptly notify the Rights Agent of such duties.  The Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions of any co-Rights Agent.

 

Section 3.                                           Issuance of Right Certificates.

 

(a)                                           Until the earlier of the Distribution Date, the Expiration Date and the Final Expiration Date, (i) the Rights will be evidenced solely by the certificates for the shares of Common Stock of the Company registered in the names of the holders of the shares of Common Stock of the Company or, with respect to uncertificated shares of Common Stock of the Company registered in book entry form (“Book Entry Shares”) (which certificates for shares of Common Stock and Book Entry Shares shall also be deemed to be Right Certificates), the Rights related thereto will be evidenced by the notation in book entry on the records of the Company representing these shares, and, in each case, not by separate certificates, (ii) the registered holders of shares of Common Stock of the Company shall also be the registered holders of the associated Rights,  (iii) the Rights (and the right to receive certificates therefor) will be transferable only in connection with the transfer of the underlying shares of Common Stock of the Company (including a transfer to the Company), and (iv) the surrender for transfer of any certificates representing shares of Common Stock of the Company or Book Entry Shares, except as otherwise provided herein, shall also constitute the transfer of the Rights associated with the Common Stock represented thereby. In the event that the Company purchases or otherwise acquires any Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Stock that are no longer outstanding.

 

(b)                                           As soon as practicable after the Distribution Date, the Rights Agent will, if requested to do so by the Company and provided with all necessary information and documents, at the expense of the Company, send, by first-class, postage prepaid mail, to each record holder of shares of Common Stock of the Company as of the Close of Business on the Distribution Date, at the address of the holder shown on the records of the Company, a certificate in substantially the form of Exhibit B (the “Right Certificate”) evidencing the Rights underlying the shares of Common Stock of the Company so held.  As of and after the Distribution Date, the Rights will be evidenced solely by the Right Certificates.  The Company shall promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if notification is given orally, the Company shall confirm the same in writing on or prior to the next succeeding Business Day.  Until such written notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not occurred.

 

(c)                                            Upon request of any holder of record of a Right, the Company will send or cause to be sent a copy of this Agreement and a copy of the Summary of the Terms of the Rights, substantially in the form attached hereto as Exhibit C (the “Summary of Rights”), by first-class, postage prepaid mail, to the holder at the address of such holder shown on the records of the Company or the transfer agent or registrar for the Common Stock. Any failure to send a copy of this Agreement and a copy of the Summary of Rights shall not invalidate the Rights or affect their

 

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transfer with the Common Stock.

 

(d)                                           Until the Distribution Date (or, if earlier, the Expiration Date or Final Expiration Date), the surrender for transfer of any certificate for shares of Common Stock of the Company shall also constitute the surrender for transfer of the Rights associated with the shares of Common Stock represented thereby and the transfer of shares of Common Stock on the records of the Company shall also constitute the transfer of the Rights associated with the shares.

 

(e)                                            Certificates issued for shares of Common Stock of the Company (including, without limitation, certificates issued upon transfer or exchange of shares of Common Stock of the Company) after the Record Date, but prior to the earlier of the Distribution Date, the Expiration Date or the Final Expiration Date, shall have impressed on, printed on, written on or otherwise affixed to them a legend in substantially the following form:

 

“This certificate also evidences and entitles the holder to certain rights (the “Rights”) as set forth in a Section 382 Tax Benefits Preservation Plan by and between Celadon Group, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (or any successor rights agent), dated as of August 9, 2018, as the same may be amended, extended or renewed from time to time (the “Plan”), the terms of which are incorporated herein by reference and a copy of which is on file at the principal executive office of the Company. Under certain circumstances, as set forth in the Plan, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate.  The Company will mail to the holder of record of this certificate a copy of the Plan, without charge after receipt of a written request therefor.  Under certain circumstances, as provided in the Plan, Rights which are issued to, transferred to or have been beneficially owned by Acquiring Persons (as such term is defined in the Plan) or any purported subsequent holder of such Rights will become null and void and will no longer be transferable. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification to 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 any Book Entry Shares, such legend shall be included in a notice to the record holder of such shares in accordance with applicable law. Notwithstanding this Section 3(e), the failure to print the foregoing legend on any such certificate representing shares of Common Stock of the Company or any defect therein, nor the failure to provide the notice thereof to the holder of Book Entry Shares, shall not affect in any manner whatsoever the application, interpretation or enforceability of any part of this Agreement or the rights of any holder of the Rights.

 

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Section 4.                                           Form of Right Certificates; Notice to Rights Agent as to Acquiring Person.

 

(a)                                           The Right Certificates (and the forms of election to purchase shares and forms of assignment to be printed on the reverse thereof), when, as and if issued, shall be substantially in the form set forth in Exhibit B and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (which do not affect the rights, liabilities, duties or responsibilities of the Rights Agent) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any law, 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 terms and conditions hereof, the Right Certificates evidencing the Rights, whenever issued, on their face shall entitle the holders thereof to purchase, for each Right, one Unit, at the Purchase Price, but the number and type of shares or other property holders thereof shall be entitled to purchase and the Purchase Price, shall be subject to adjustment as provided in this Agreement.

 

(b)                                           Notwithstanding any other provision of this Agreement, any Right Certificate that represents Rights that may be or may have been at any time on or after the Distribution Date Beneficially Owned by an Acquiring Person or any Affiliate or Associate thereof (or any purported transferee of such Rights) may have impressed on, printed on, written on or otherwise affixed to it a legend in substantially the following form:

 

“The beneficial owner of the Rights (the “Rights”) represented by this Right Certificate may be an Acquiring Person or an Affiliate or Associate (as such terms are defined in the Section 382 Tax Benefits Preservation Plan by and between Celadon Group, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (or any successor rights agent), dated as of August 9, 2018, as from time to time amended, extended or renewed (the “Plan”)) of an Acquiring Person or a subsequent holder of a Right Certificate beneficially owned by such Persons (as defined in the Plan). Accordingly, under certain circumstances as provided in the Plan, this Right Certificate and the Rights represented hereby will become null and void and will no longer be transferable.”

 

The provisions of this Agreement shall be operative whether or not the foregoing legend is imprinted on any such Right Certificate.  The Company shall give notice to the Rights Agent promptly after it becomes aware of the existence of any Acquiring Person.

 

Section 5.                                           Countersignature and Registration.

 

(a)                                           The Right Certificates shall be duly executed on behalf of the Company by the Chief Executive Officer, Chief Financial Officer, General Counsel or any Vice President of the Company, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested to by the Secretary, Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, either manually or by facsimile signature.  The Right Certificates shall be countersigned by the Rights Agent, manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned.  In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be

 

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such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, the Right Certificates nevertheless may be countersigned by the Rights Agent, issued and delivered with the same force and effect as though the person who signed the 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 the 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 and receipt by the Rights Agent of written notice to that effect and all other relevant information referred to in Section 3(a), the Rights Agent will keep or cause to be kept books for registration and transfer of the Right Certificates issued hereunder.  The 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, the date of each of the Right Certificates, and the certificate numbers for 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), 7(e) and 13(b), 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 or Right Certificates may be (a) transferred or (b) split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of Units (and/or other securities or property, 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 any Right Certificate shall surrender the Right Certificate at the office of the Rights Agent designated for this purpose with the form of assignment on the reverse side thereof duly endorsed (or enclose with such Right Certificate a written instrument of transfer in a form satisfactory to the Company and the Rights Agent, duly executed by the registered holder thereof or the registered holder’s attorney duly authorized in writing), and with all signatures duly guaranteed.  Any registered holder desiring to split up, combine or exchange any Right Certificate shall make such request in a writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be split up, combined or exchanged at the office of the Rights Agent designated for such purpose.  Thereupon or as promptly as practicable thereafter, the Company shall prepare, execute and deliver to the Rights Agent, and the Rights Agent shall countersign (by manual or facsimile signature) 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 from the holder of a Right Certificate of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.  The Rights Agent shall have no duty or obligation to take any action under this Section 6 unless and until the Rights Agent is reasonably satisfied that all such taxes and/or charges have been paid.

 

(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 of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if

 

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mutilated, the Company will execute and deliver to the Rights Agent a new Right Certificate of like tenor for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.  Without limiting the foregoing, the Company may require the owner of any lost, stolen or destroyed Right Certificate, or his legal representative, to give the Company a bond sufficient to indemnify the Company and the Rights Agent against any claim that may be made against it on account of the alleged loss, theft or destruction of any such Right Certificate or the issuance of any such new Right Certificate.

 

Section 7.                                           Exercise of Rights; Purchase Price; Expiration Date of Rights.

 

(a)                                        Subject to Section 7(e) or as otherwise provided in this Agreement, the registered holder of any Right Certificate may exercise the Rights evidenced thereby in whole at any time or in part from time to time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed (with such signature duly guaranteed), to the Rights Agent at the office of the Rights Agent designated for such purposes together with payment of the Purchase Price (defined below), or portion thereof, as applicable, with respect to each Unit or Units (and/or other securities or property in lieu thereof) as to which the Rights are exercised, subject to adjustment as hereinafter provided, at or prior to the earlier of the Expiration Date and the Final Expiration Date.

 

(b)                                        The purchase price shall initially be $15.00 for each Unit issuable pursuant to the exercise of a Right.  The purchase price and the number of Units (and/or other securities or property, as the case may be) to be acquired upon exercise of a Right shall be subject to adjustment from time to time as provided in Section 11.  (The purchase price, after giving effect to any adjustments, shall be referred to as the “Purchase Price.”) The Purchase Price shall be payable in lawful money of the United States of America, in accordance with Section 7(c).

 

(c)                                         Except as provided in Sections 7(d) and 7(e), upon receipt of a Right Certificate with the form of election to purchase duly executed, accompanied by payment of the Purchase Price, or the applicable portion thereof, for the Units (and/or other securities or property, as the case may be) to be purchased and an amount equal to any applicable tax or governmental charge, by cash, certified check or official bank check payable to the order of the Company or the Rights Agent, the Rights Agent shall thereupon promptly (i) (A) requisition from the Company or any transfer agent for the Units, certificates for the number of Units so elected to be purchased, and the Company will comply and hereby authorizes and directs the transfer agent or shall cause the transfer agent (if the Rights Agent is not also the transfer agent) to comply with all such requests or (B) if the Company, in its sole discretion, shall have elected to deposit the shares of Preferred Stock underlying the Units issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts representing the number of Units as are to be purchased (in which case certificates for the shares of Preferred Stock underlying the Units represented by the receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with Section 13(b) and (iii) promptly after receipt of the Units’ certificates or depositary receipts, as the case may be, cause the same to be delivered to or upon the order of the registered holder of the Right Certificate, registered in such name or names as may be designated by such holder, and, when appropriate, after receipt, promptly deliver the cash to or

 

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upon the order of the registered holder of the 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), the Company shall make all arrangements necessary so that those other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with this Agreement and the Rights Agent shall promptly take the appropriate actions corresponding to the foregoing clauses (i) through (iii), as applicable.  In addition, in the case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return the Right Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented by the Right Certificate no longer include the rights provided by Section 11(a)(ii) and, if less than all the Rights represented by such Right Certificate were so exercised, the Rights Agent shall indicate on the Right Certificate the number of Rights represented thereby which continue to include the rights provided by Section 11(a)(ii).  In case the holder of any Right Certificate shall exercise (except pursuant to Section 11(a)(ii)) 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 and delivered to the registered holder of the Right Certificate or the holder’s duly authorized assigns, subject to the provisions of Section 13(b).

 

(d)                                                    Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless the registered holder shall have (i) properly completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for 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 or the Rights Agent shall reasonably request.

 

(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 any Affiliate or Associate thereof), (ii) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives those Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in the Acquiring Person or to any Person with whom the Acquiring Person has a continuing agreement, arrangement or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer which the Board has determined is part of an agreement, 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 those Rights shall have any rights whatsoever with respect to those Rights, whether under any provision of this Agreement or otherwise.  The Company shall notify the Rights Agent when this Section 7(e) applies and shall use its best efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are complied with, but neither the Company nor the Rights Agent shall have any liability to any holder of Right Certificates or other Person as a result of the Company’s failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder.

 

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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 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 Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company, destroy the cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

 

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

 

(a)                                           The Company covenants and agrees that, from and after the Distribution Date, it will cause to be reserved and kept available, out of and to the extent of its authorized and unissued shares of Preferred Stock not reserved for another purpose or shares of Preferred Stock not reserved for another purpose held in its treasury, the number of Units that, as provided in this Agreement, will be sufficient to permit the exercise in full of all outstanding Rights; provided, however, that the Company shall not be required to reserve and keep available Units sufficient to permit the exercise in full of all outstanding Rights pursuant to the adjustments set forth in Sections 11(a)(ii) or 11(a)(iii) unless, and only to the extent that, the Rights become exercisable pursuant to such adjustments.

 

(b)                                           The Company shall (i) use its best efforts to cause, from and after the Distribution Date, the Rights and all Units (and/or following the occurrence of a Triggering Event, shares of Common Stock of the Company or other securities, as the case may be) issued or reserved for issuance upon exercise thereof to be listed or admitted to trading on the NYSE, NASDAQ or another national securities exchange, and (ii) if then necessary to permit the offer and issuance of such Units, shares of Common Stock of the Company and/or other securities, as the case may be, register and qualify such Units (or shares of Common Stock of the Company or other securities, as the case may be) under the Securities Act and any applicable state securities or “blue sky” laws (to the extent exemptions therefrom are not available), cause the related registration statement and qualifications to become effective as soon as possible after filing and keep such registration statement and qualifications effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of the expiration of the 60-day period referred to in Section 11(a)(ii), the Expiration Date or the Final Expiration Date.  The Company may temporarily suspend, for a period of time not to exceed 90 calendar days, the exercisability of the Rights in order to prepare and file a registration statement under the Securities Act 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.  The Company shall promptly notify the Rights Agent in writing whenever it makes a public announcement pursuant to this Section 9(b) and give the Rights Agent a copy of such announcement. Until such written notice is received by the Rights Agent, the Rights Agent may presume conclusively that no such suspension has occurred or such suspension is still in effect, as the case may be. Notwithstanding any provision

 

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of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been obtained or the exercise thereof shall not otherwise be permitted under applicable law or a registration statement under the Securities Act (if required) shall not have been declared effective.

 

(c)                                  The Company covenants and agrees that it will take all such action as may be necessary to insure that all Units (or shares of Common Stock or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Units (or shares of Common Stock of the Company or other securities) subject to payment of the Purchase Price (or the applicable portion thereof) in respect thereof, be duly and validly authorized and issued and fully paid and nonassessable Units (and/or shares of Common Stock and other securities, as the case may be) in accordance with applicable law.

 

(d)                                 The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and governmental charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Units (or shares of Common Stock of the Company or other securities or property, as the case may be) upon the exercise of Rights.  The Company shall not, however, be required to pay any tax or charge 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 for Units (or shares of Common Stock of the Company or other securities or property, as the case may be) upon exercise of Rights in a name other than that of, the registered holder of the Right Certificate, and the Company and the Rights Agent shall not be required to issue or deliver a Right Certificate or certificate for Units (and/or shares of Common Stock of the Company or other securities or property, as the case may be) to a Person other than the registered holder until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s and the Rights Agent’s satisfaction that no such tax or charge is due.

 

Section 10.                                    Securities Issuable Upon Exercise.  Each Person in whose name any certificate for Units (or shares of Common Stock of the Company or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Units (or shares of Common Stock or other securities, as the case may be) represented thereby on, and the certificate shall be dated, the date upon which the Right Certificate evidencing these Rights was duly surrendered and payment of the Purchase Price, or the applicable portion thereof (and any applicable taxes and governmental charges), was made; provided, however, that if the date of such presentation and payment is a date upon which the transfer books for the Units (or shares of Common Stock of the Company or other securities, as the case may be) are closed, such Person shall be deemed to have become the record holder of such Units (or shares of Common Stock of the Company or other securities) on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books for the Units (or shares of Common Stock of the Company or other securities) 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 stockholder of the Company with respect to shares for which the Right shall be exercisable, including without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

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Section 11.                                    Adjustments to Number and Kind of Securities or Other Property, Number of Rights or Purchase Price.

 

The number and kind of securities or other property subject to purchase upon the exercise of each Right, the number of Rights outstanding and the Purchase Price are subject to adjustment from time to time as provided in this Section 11.

 

(a)                                 (i)                                     In the event that the Company shall at any time after the date of this Agreement (A) declare or pay any dividend on the shares of Preferred Stock payable in shares of Preferred Stock, (B) subdivide or split the outstanding shares of Preferred Stock into a greater number of shares, (C) combine or consolidate the outstanding shares of Preferred Stock into a smaller number of shares or effect a reverse split of the outstanding shares of Preferred Stock or (D) issue any shares of its capital stock in a reclassification of the shares of Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then except as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price in effect at the time of the record date for the dividend or of the effective date of the subdivision, split, combination, consolidation or reclassification, and the number of Units and the number and kind of other securities, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number of Units and/or the number and kind of other securities as the case may be, which, if the Right had been exercised immediately prior to such date, whether or not such Right was then exercisable, and at a time when the transfer books for the Preferred Stock (or other capital stock, as the case may be) of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of the dividend, subdivision, split, combination consolidation or reclassification.  If an event occurs which would require an adjustment under both Sections 11(a)(i) and 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 any Person at any time becomes an Acquiring Person (this event being referred to as a “Section 11(a)(ii) Event”), then, proper provision shall be made so that, upon expiration of the Redemption Period and subject to Section 23, and except as otherwise provided in Section 7(e), each holder of a Right shall, for a period of sixty (60) calendar days (or such longer period as may be established by the Board) after the later of the occurrence of any such event and the effective date of an appropriate registration statement under the Securities Act pursuant to Section 9, have a right to receive for each Right, upon exercise thereof in accordance with the terms of this Agreement and payment of the Purchase Price (or the applicable portion thereof) 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 Units for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event (whether or not such Right was then exercisable), and (y) dividing that product by 50% of the Current Market Price per share of Common Stock of the Company on the date of such first occurrence (such number of shares of Common Stock is called the “Adjustment Shares”); provided, however, that the Purchase Price and the number of Adjustment Shares shall be further adjusted as appropriate to reflect any stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company, or as provided in this Agreement to reflect any other events, occurring after the date of such first occurrence; and provided, further, that in

 

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connection with any exercise effected pursuant to this Section 11(a)(ii), the Board may (but shall not be required to) determine that a holder of Rights shall not be entitled to receive shares of Common Stock of the Company that would result in such holder, together with such holder’s Affiliates, becoming the Beneficial Owner of 4.99% or more of the total number of shares of Common Stock of the Company then outstanding.  If a holder would, but for the previous clause, be entitled to receive a number of shares of Common Stock of the Company (such shares, the “Excess Flip-In Shares”), in lieu of receiving such Excess Flip-In Shares, such holder will be entitled to receive an amount in (1) cash, (2) debt securities of the Company, (3) other assets, or (4) any combination of the foregoing, having an aggregate value equal to the Current Market Price per share of Common Stock of the Company on the date of the occurrence of a Section 11(a)(ii) Event multiplied by the number of Excess Flip-In Shares that would otherwise have been issuable to such holder.

 

(iii)                               In the event that the number of shares of Common Stock of the Company which are authorized by the Company’s Amended and Restated Certificate of Incorporation, as amended, but not outstanding and which are not reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights for shares of Common Stock of the Company in accordance with Section 11(a)(ii) and the Rights shall become so exercisable, to the extent permitted by applicable laws, each Right shall thereafter represent the right to receive, upon exercise thereof at the Purchase Price, (x) a number of shares of Common Stock of the Company (up to the maximum number of shares of Common Stock of the Company which may be permissibly issued), and (y) a number Units so that, when added together, the numbers in clauses (x) and (y) equal the number of Adjustment Shares.  In the event the number of shares of Common Stock and Preferred Stock which are authorized by the Company’s Amended and Restated Certificate of Incorporation, as amended, but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is insufficient to permit the exercise in full of the Rights in accordance with the prior sentence and the Rights shall become so exercisable, to the extent permitted by applicable law, the Company shall: (A) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”) and that value shall be conclusive for all purposes; and (B) with respect to each Right, upon exercise of such Right, issue shares of Common Stock of the Company and Units to the extent available for the exercise in full of such Right and, to the extent shares of Common Stock or Units are not so available, make adequate provision to substitute for the Adjustment Shares not received upon exercise of such Right: (1) other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock which, by virtue of having dividend, voting and liquidation rights substantially comparable to the shares of Common Stock of the Company, are deemed in good faith by the Board to have substantially the same value as one share of Common Stock of the Company (such shares are herein called “Share Equivalents”) and whose determination shall be conclusive for all purposes); (2) debt securities of the Company; (3) other assets; (4) cash; or (5) any combination of the foregoing as determined by the Board, having a value which, when added to the value of the number of the shares of Common Stock of the Company and Units actually issued upon exercise of such Right, shall have an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board based upon the advice of a nationally recognized independent investment banking firm selected by the Board; provided, however, if the Company shall not have made adequate provision to deliver shares of Common Stock, Units and Share Equivalents pursuant to Section 11(a)(ii), the prior sentence of this paragraph and clause (B) above within 50 calendar days following the Stock

 

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Acquisition Date, then, to the extent permitted by applicable law, the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available), Units or Share Equivalents and then, if necessary, cash, debt securities, or other assets (in that order) which shares, units, cash, debt securities and/or other assets have an aggregate value equal to the excess of the Current Value over the Purchase Price, and provided, further, that the Board may (but shall not be required to) determine that a holder of Rights shall not be entitled to receive equity securities under this Section 11(a)(iii) to the extent the Company determines the receipt thereof could limit the Company’s ability to utilize the Tax Benefits.  If the Board shall determine in good faith that it is likely that sufficient additional shares of Common Stock, Units or Share Equivalents could be authorized for issuance upon exercise in full of the Rights, the 50 calendar day period set forth above may be extended to the extent necessary, but not more than 120 calendar days after the Stock Acquisition Date, in order that the Company may seek stockholder approval for the authorization of such additional shares or Share Equivalents (such 50 calendar day period, as it may be extended, is called the “Substitution Period”).  To the extent that the Company determines that some action need be taken pursuant to the foregoing provisions of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e), that this action shall apply uniformly to all outstanding and exercisable Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to the foregoing provisions of this Section 11(a)(iii) and, if necessary, 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 (with a prompt written notice thereof to the Rights Agent) at such time as the suspension is no longer in effect.  For purposes of this Section 11(a)(iii), the value of each Unit, each share of Common Stock of the Company and the per share or unit value of any Share Equivalent shall be deemed to equal the Current Market Price of a share of Common Stock of the Company thereof as of the Stock Acquisition Date.

 

(b)                                 In case the Company shall fix a record date for the issuance of rights (other than the Rights), options or warrants to all holders of shares of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within 45 calendar days after this record date) shares of Preferred Stock and/or securities having the same rights, privileges and preferences as the Preferred Stock (“Equivalent Preferred Securities”) or securities convertible into Preferred Stock or Equivalent Preferred Securities at a price per share of Preferred Stock or per unit of Equivalent Preferred Securities (or having a conversion price per share or unit, if a security convertible into Preferred Stock or Equivalent Preferred Securities) less than the Current Market Price per share of Preferred Stock on the record date, the Purchase Price to be in effect after the record date shall be determined by multiplying the Purchase Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or units of Equivalent Preferred Securities (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at that 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 units of Equivalent Preferred Securities to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible).  In case the subscription price may be paid by delivery of consideration part or all of

 

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which may be in a form other than cash, the value of the non-cash consideration shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent.  Shares of Preferred Stock and units of Equivalent Preferred Securities owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.  This 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 the record date had not been fixed.

 

(c)                                  In case the Company shall fix a record date for a distribution to all holders of shares of Preferred Stock (including any such distribution made in connection with a consolidation, merger or share exchange in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend), assets (other than a dividend payable in shares of Preferred Stock, but including any dividend payable in stock other than 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 the record date by a fraction, the numerator of which shall be the Current Market Price per share of Preferred Stock on the record date, less the fair market value (as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such Current Market Price per share of Preferred Stock; provided, however, that in no event shall the consideration to be paid upon exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon the exercise of one Right.  These adjustments shall be made successively whenever such a record date is fixed; and in the event that the distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed.

 

(d)                                 (i)                                     For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii), and subject to Section 11(d)(ii), the “Current Market Price” per share of stock or unit of other securities on any date shall be deemed to be the average of the daily closing prices per share of such stock or unit of other securities for the thirty (30) consecutive Trading Days immediately prior to such date; provided, however, that in the event that the Current Market Price per share of any stock or unit of other securities is determined during a period following the announcement by the issuer of that stock or other security of (i) any dividend or distribution on such stock or other securities (other than a regular quarterly cash dividend and other than the Rights), or (ii) any subdivision, split, combination or reclassification of that stock or other securities, and prior to the expiration of the requisite thirty (30) Trading Day period, the ex-dividend date for the dividend or distribution, or the record date for the subdivision, combination or reclassification occurs, then, and in each such case, the Current Market Price shall be properly adjusted to take into account 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 that 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 shares of stock or units of securities listed or admitted to trading on the NYSE or NASDAQ or, if the shares of stock or units of any other securities are not listed or admitted to trading on the NYSE or NASDAQ, as reported in the

 

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principal consolidated transaction reporting system with respect to shares of stock or units of other securities listed on the principal national securities exchange on which the shares of stock or units of other securities are listed or admitted to trading or, if the shares of stock or units of other security are not listed or admitted to trading on any national securities exchange, the last quoted sale 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 Quotations System or any other system then in use, or, if on any such date the shares of such stock or units of such other security 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 such stock or other securities selected by the Board; provided, that if such security is not listed or quoted on the NYSE or NASDAQ and the principal market for such securities is a non-U.S. securities exchange, then the closing price for each day shall be determined by using the customary convention for determining the closing price of a security on such exchange as determined by the Board (in which event the exchange rate of the relevant currency into U.S. dollars for each Trading Day (as defined below) shall be determined by the Board).  Subject to Section 11(d)(ii) with respect to Units, if such stock or unit of other securities is not publicly held or not so listed, traded or quoted, “Current Market Price” per share or other unit of such securities shall mean the fair value per share of stock or other unit of such securities as determined in good faith by the Board 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 Unit shall be determined in the same manner as set forth above in paragraph (i) of this Section 11(d) (other than the last sentence thereof).  If the Current Market Price per Unit cannot be determined in the manner provided above because the Units are not publicly held, listed or traded or quoted in a manner described in paragraph (i) of this Section 11(d), the “Current Market Price” per Unit shall be conclusively deemed to be an amount equal to the Current Market Price per share of the Common Stock of the Company.  If neither the shares of Common Stock of the Company nor the Units are listed or traded or quoted as described in Section 11(d)(i), “Current Market Price” per share thereof shall mean the fair value per share of Common Stock of the Company as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

 

(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 one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11 shall be made to the nearest cent or to the nearest thousandth of a Unit or share of Common Stock or any other security, 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 mandates such adjustment, or (ii) the Final Expiration Date.

 

(f)                                   If as a result of an adjustment made pursuant to Section 11(a)(ii), the holder of any Right thereafter exercised shall become entitled to receive any securities other than Units, thereafter the number of the other securities so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Preferred Stock

 

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and/or Units contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10 and 13 with respect to the shares of Preferred Stock and/or Units shall apply on like terms to any such other shares.

 

(g)                                  All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Units (and/or other securities) purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

(h)                                 Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Units (calculated to the nearest one-thousandth) equal to the quotient obtained by (i) multiplying (x) the number of Units covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, 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 or any adjustment to the number of Units for which a Right may be exercised, to adjust the number of Rights, in lieu of any adjustment in the number of Units purchasable upon the exercise of a Right.  Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of Units for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price.  The Company shall make a public announcement (with prompt written notice thereof to the Rights Agent) 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 date thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) calendar 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 the registered holders of Right Certificates on the record date Right Certificates evidencing, subject to Section 13, the additional Rights to which the holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such registered holders 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 registered holders of Right Certificates on the record date specified in the public announcement.

 

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(j)                                    Irrespective of any adjustment or change in the Purchase Price or the number of Units issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per Unit and the number of Units 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, attributable to the Units, shares of Common Stock or other securities issuable upon exercise of the Rights, the Company shall use its best efforts to take any corporate action, which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Units, shares of Common Stock or other securities 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 (with prompt written notice thereof to the Rights Agent) until the occurrence of such event the issuance to the holder of any Right exercised after such record date the Units and/or other securities of the Company, if any, issuable upon such exercise over and above the Units and/or other securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive the additional Units and/or other securities upon the occurrence of the event requiring such adjustment.

 

(m)                             Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good faith judgment the Board shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock or Common Stock, (ii) issuance wholly for cash of any shares of Preferred Stock or Common Stock at less than the Current Market Price, (iii) issuance wholly for cash or shares of Common Stock, Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock or Common Stock, (iv) stock dividends, or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Common Stock or Preferred Stock shall not be taxable to such stockholders.

 

(n)                                 The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 22, Section 23 or Section 26, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or eliminate the benefits intended to be afforded by the Rights.

 

(o)                                 Anything in this Agreement to the contrary notwithstanding, in the event that at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare or pay any dividend on the shares of Common Stock of the Company payable in shares of Common Stock of the Company or (ii) effect a subdivision or split the outstanding shares of Common Stock of the Company into a greater number of shares of Common Stock of the Company or (iii) combine or consolidate the outstanding shares of Common Stock of the Company into a small number of shares or effect a reverse split of the outstanding shares of Common Stock of the Company, then in any such case, each share of Common Stock outstanding following payment of such dividend, such subdivision, split, combination, consolidation or issuance shall

 

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continue to have one Right (as adjusted as otherwise provided herein) associated therewith and the Purchase Price following any such event shall be proportionately adjusted to equal the result obtained by multiplying the Purchase Price immediately prior to such event by a fraction, the numerator of which shall be the total number of shares of Common Stock of the Company outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock of the Company outstanding immediately following the occurrence of such event.  The adjustment provided for in the preceding sentence shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected.

 

Section 12.                                    Certification of Adjustments.  Whenever an adjustment is made as provided in Section 11, the Company shall (a) promptly prepare a certificate setting forth the adjustment and a reasonably detailed statement of facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the shares of Common Stock and Preferred Stock a copy of the certificate, and (c) if a Distribution Date has occurred, mail or cause the Rights Agent to mail a brief summary thereof to each registered holder of a Right Certificate (or, if prior to the Distribution Date, to each holder of record of shares of Common Stock) in accordance with Section 25. Notwithstanding the foregoing sentence, the failure of the Company to prepare such certificate or statement or make such filings or mailings shall not affect the validity of, or the force or effect of, the requirement for such adjustment.  The Rights Agent shall be fully protected in relying on such certificate, shall have no duty or liability with respect to any adjustment therein contained, and shall not be deemed to have knowledge of any adjustment or events related thereto unless and until it shall have received such certificate. Subject to the preceding sentence, any adjustment to be made pursuant to Section 11 shall be effective as of the date of the event giving rise to the adjustment.

 

Section 13.                                    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.  Units 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 the agreement shall provide that the holders of the depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Units represented by the depositary receipts.  In lieu of such fractional Rights, the Company shall pay to the holders of record of the Right Certificates with regard to which the fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the then Current Market Value of a whole Right.

 

(b)                                 The Company shall not be required to issue fractions of Units or other securities upon exercise of the Rights or to distribute certificates which evidence fractional Units or other securities.  In lieu of issuing fractions of Units or other securities, the Company shall pay to the registered holders of Right Certificates at the time the Right Certificates are exercised as herein provided an amount in cash equal to the same fraction of the then Current Market Value of a Unit or other securities, as the case may be.

 

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(c)                                  The holder of a Right by the acceptance of a Right expressly waives his right to receive any fractional Right or fractional Unit or other fractional securities (other than the fractional shares of Preferred Stock represented by Units) upon exercise of a Right.

 

(d)                                 Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent under this Agreement, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and formulas utilized in calculating such payments; and (ii) provide sufficient funds to the Rights Agent in the form of fully collected funds to make such payments.  The Rights Agent shall be fully protected in relying upon such a certificate and has no duty with respect to, and will not be deemed to have knowledge of, any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent has received such a certificate and sufficient monies.

 

Section 14.                                    Rights of Action.  All rights of action in respect of this Agreement, except those rights of action vested in the Rights Agent pursuant to Sections 17 and 19, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the holders of record of the Common Stock). Any registered holder of any Right Certificate (or, prior to the Distribution Date, the shares of Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, any shares of Common Stock), may without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, the registered holders of the Common Stock), on its own behalf and for its own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, its right to exercise the Rights evidenced by the Right Certificate in the manner provided in the 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, accordingly, that they will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.

 

Section 15.                                    Agreement of Right Holders.  Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

 

(a)                                 prior to the Distribution Date, the Rights will not be evidenced by a Right Certificate and will be transferable only in connection with the transfer of Common Stock of the Company;

 

(b)                                 from and after the Distribution Date, the Right Certificates will be transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates contained therein properly completed and duly executed;

 

(c)                                  subject to Section 6 and Section 7(e), the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution

 

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Date, the associated Common Stock certificate or Book Entry Shares) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Stock certificate (or notices provided to holders of Book Entry Shares) made by anyone other than the Company or the Rights Agent or the transfer agent of the shares of Common Stock) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and

 

(d)                                 notwithstanding anything in this Agreement to the contrary, neither the Company, its directors, officers, employees and agents 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, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or by reason of any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, regulatory or administrative agency or commission, prohibiting or otherwise restraining performance of such obligation.

 

Section 16.                                    Right Certificate Holder Not Deemed a Stockholder.  No holder of a Right, as such, shall be entitled to vote, receive dividends in respect of or be deemed for any purpose to be the holder of shares of Common Stock, Preferred Stock, Units or any other securities of the Company which may at any time be issuable upon the exercise of the Rights, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24 hereof), 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 17.                                    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, reimbursement of its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the preparation, delivery, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder.

 

(b)                                 The Company also agrees to indemnify the Rights Agent and its Affiliates and their respective employees, officers and directors for, and to hold it harmless against, any loss, damage, liability, demand, judgment, fine, penalty, claim, settlement, cost or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent as each must be determined by a final non-appealable judgment of a court of competent jurisdiction, for any action taken, suffered or omitted by the Rights Agent in connection with the acceptance of, administration of and performance of its duties under this Agreement, including reasonable attorneys’ fees and expenses and the costs and expenses of defending against any claim of liability in the premises.

 

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(c)                                  The Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration and performance of this Agreement in reliance upon any Right Certificate, certificate for shares of Common Stock or Preferred Stock, Units or 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 reasonably believed by it to be genuine and to be signed, executed and, where expressly required hereunder, guaranteed, verified or acknowledged, by the proper person or persons, or otherwise upon the advice of counsel as set forth herein.  The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith, unless and until it has received such notice.

 

The provisions of this Section 17 and Section 19 shall survive the termination or expiration of this Agreement, the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.  The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits, even if the Rights Agent has been advised of the likelihood of such loss or damage.  Any liability of the Rights Agent under this Agreement (other than by reason of the Rights Agent’s gross negligence, bad faith or willful misconduct, as is determined by a final non-appealable judgment of a court of competent jurisdiction) will be limited to the amount of fees paid by the Company to the Rights Agent.

 

Section 18.                                    Merger or Consolidation or Change of Name of Rights Agent.

 

(a)                                 Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the stockholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 20.  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 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 such 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

 

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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 19.                                    Duties of Rights Agent.  The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Agreement (and no implied duties and obligations) 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 advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of, any action taken, suffered or omitted by it, subject to Section 17(b) and in accordance with such advice or 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 any Acquiring Person and the determination of Current Market Price) be proved or established by the Company prior to taking, suffering or omitting to take 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 Chief Executive Officer, the Chief Financial Officer, the General Counsel, any Vice President of the Company, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be complete and full authorization and protection to the Rights Agent, and, subject to Section 17(b), the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it under the provisions of this Agreement in reliance upon such certificate.

 

(c)                                  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 its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

 

(d)                                 The Rights Agent shall not have any liability for nor 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 thereon); nor shall it be liable nor 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 liable or responsible for any adjustment required under the provisions of Section 11 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 receipt of a certificate describing any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Stock or Common Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of Preferred Stock (or other securities, as the case may be) will, when issued, be validly authorized and issued, fully paid and nonassessable.

 

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(e)                                  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.

 

(f)                                   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 Chief Executive Officer, the Chief Financial Officer, the General Counsel, any Vice President, the Treasurer, Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such advice or instructions shall be full authorization and protection to the Rights Agent and, subject to Section 17(b), the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in accordance with the advice or instructions of any such officer.

 

(g)                                  The Rights Agent and any stockholder, Affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement.  Nothing herein shall preclude the Rights Agent and such Persons from acting in any other capacity for the Company or for any other Person.

 

(h)                                 If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 of such certificate, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company and the Rights Agent shall not be liable for its failure to act or any delay in acting in compliance with this clause (i).

 

(i)                                     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 (other than internal costs incurred by the Rights Agent in providing services to the Company in the ordinary course of its business as Rights Agent and for which the Rights Agent shall be compensated by the Company pursuant to Section 17(a)) or in the exercise of its rights or powers if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 

(j)                                    The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be liable, answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company, any holder of Rights or any other Person resulting from any such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct in the selection and continued employment thereof, as each is determined by a final, non-appealable court judgment of a court of competent jurisdiction.

 

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(k)                                 The Rights Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Rights with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

 

(l)                                     The Rights Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including without limitation obligations under applicable regulation or law.

 

(m)                             The Rights Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Rights.

 

(n)                                 The Rights Agent may rely on, and be fully authorized and protected in acting or failing to act in reliance upon, (a) any guaranty of signature by an “Eligible Guarantor Institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.

 

Section 20.                                    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 calendar days’ notice in writing mailed to the Company and, to the extent the Rights Agent is not the transfer agent of the shares of Common Stock, to each such transfer agent by registered or certified mail. The Company shall notify the registered holders of any such change in Rights Agent. The Company may remove the Rights Agent or any successor Rights Agent (with or without cause) upon thirty (30) calendar days’ notice in writing, mailed to the Rights Agent or any successor Rights Agent, as the case may be, and to each transfer agent of the shares of Common Stock by registered or certified mail, and to the registered holders of the Right Certificates by mail.  In the event a transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice to holders.  If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such appointment within a period of thirty (30) calendar days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the registered holder of a Right Certificate (who shall, with such notice, submit such holder’s 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) a Person organized and doing business under the laws of the United States or any state of the United States so long as such Person is in good standing, is authorized to do business in such state, is authorized under such laws to exercise stockholder services powers, is subject to supervision or examination by federal or state authority and has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000

 

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or (b) an Affiliate of a Person described in clause (a) of this sentence.  After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and shall execute and deliver, if applicable, any further assurance, conveyance, act or deed necessary for that purpose.  Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock, and mail a notice thereof in writing to the registered holders of the Right Certificates, if any.  Failure to give any notice provided for in this Section 20, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

Section 21.                                    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 its Board 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 shares of Common Stock of the Company following the Distribution Date and prior to the earlier of the redemption of the Rights, the exchange of the Rights, the Expiration Date and the Final Expiration Date, the Company (a) shall, with respect to shares of Common Stock of the Company so issued or sold pursuant to the exercise of stock options or under any employee benefit plan or arrangement, or upon the exercise, conversion or exchange of securities hereafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued, if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

 

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Section 22.                                    Redemption.

 

(a)                                 The Board may, at its option, at any time prior to the earlier of (x) the Close of Business on the tenth (10th) calendar day after the Stock Acquisition Date (or, if the tenth (10th) calendar day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (y) the Close of Business on the Final Expiration Date (the “Redemption Period”), direct the Company to, and if directed, the Company shall, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right (the total amount paid to any holder of Rights to be rounded up to the nearest $0.01), as such amount may be appropriately adjusted to reflect any stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company occurring after the date (such redemption price being hereinafter referred to as the “Redemption Price”). The Company may, at its option, pay the 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 determined by the Board, in the exercise of its sole discretion, to be at least equivalent in value to the Redemption Price.

 

(b)                                 Immediately upon the action of the Board directing the Company to make the redemption of the Rights (or, if the resolution of the Board electing to redeem the Rights states that the redemption will not be effective until the occurrence of a specified future time or event, upon the occurrence of such future time or event), and without any further action and without any notice, the right to exercise the Rights will terminate, whether or not previously exercised, and each Right, whether or not previously exercised, will thereafter represent only the right to receive the Redemption Price in cash, Common Stock or other form of consideration, as determined by the Board, in the exercise of its sole discretion.  Promptly after the action of the Board directing the Company to make such redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and each  registered holder of the then outstanding Rights in accordance with Section 25 hereof.  Any notice which is given in accordance with Section 25 hereof 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. Notwithstanding anything in this Section 22 to the contrary, the redemption of the Rights as directed by the Board may be made effective at such time, on such basis and subject to such conditions as the Board, in its sole discretion, may establish.

 

Section 23.                                    Exchange.

 

(a)                                 The Board may, at its option, at any time after the later of the Stock Acquisition Date or the Distribution Date, exchange all or part of the then-outstanding and exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii)) for Common Stock of the Company at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company occurring after the Record Date (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, (1) the Board shall not be empowered to effect an exchange pursuant to this Section 23 at any time after any Acquiring Person shall have become the Beneficial Owner of 50% or more of the Common Stock then outstanding; and (2) in connection with any exchange effected pursuant to this Section 23, the Board may (but shall not be required to)

 

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determine that a holder of Rights shall not be entitled to receive shares of Common Stock that would result in such holder, together with such holder’s Affiliates, becoming the Beneficial Owner of 4.99% or more of the shares of Common Stock then outstanding.  If a holder would, but for the proviso set forth in the previous sentence, be entitled to receive a number of shares under this Section 23 that would otherwise result in such holder, together with such holder’s Affiliates, becoming the Beneficial Owner of 4.99% or more of the shares of Common Stock then outstanding (such shares, the “Excess Exchange Shares”), in lieu of receiving such Excess Exchange Shares, such holder will be entitled to receive an amount in (1) cash, (2) debt securities of the Company, (3) other assets, or (4) any combination of the foregoing, having an aggregate value equal to the Current Market Price per share of the Common Stock on the date of the Stock Acquisition Date or Distribution Date, as applicable, multiplied by the number of Excess Exchange Shares that would otherwise have been issuable to such holder. Any such exchange will be effective immediately upon the action of the Board ordering the same, unless such action of the Board expressly provides that such exchange will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such exchange will be effective in accordance with the provisions of such action of the Board). Without limiting the foregoing, prior to effecting an exchange pursuant to this Section 23, the Board may enter into a Trust Agreement in such form and with such terms as the Board shall then approve (the “Trust Agreement”). If the Board so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all of the Common Stock issuable pursuant to the exchange (or any portion thereof that has not theretofore been issued in connection with the exchange).  From and after the time at which such shares are issued to the Trust, all stockholders then entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (and any dividends or distributions made thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement.  Any shares of Common Stock issued at the direction of the Board in connection herewith shall be validly issued, fully paid and nonassessable Common Stock, and the Company shall be deemed to have received as consideration for such issuance a benefit having a value that is at least equal to the aggregate par value of the shares so issued.

 

(b)                                 Immediately upon the action of the Board authorizing the Company to exchange any Rights pursuant to Section 23(a) and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of the holders of such Rights shall be to receive that number of shares of Common Stock (or Units, as applicable) 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 (with prompt written notice to the Rights Agent); 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 give notice of any such exchange to all of the registered holders of Rights in accordance with Section 25 hereof. Any notice which is given in accordance with Section 25 hereof shall be deemed given, whether or not the holder receives the notice.  Each notice of exchange will state the method by which the exchange of shares of Common Stock (or Units, as applicable) for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged.

 

(c)                                  Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7(e)) held by each registered holder of Rights.

 

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(d)                                 In any exchange pursuant to this Section 23, the Company, at its option, may, and to the extent there are an insufficient number of authorized shares of Common Stock not reserved for any other purpose to exchange all of the outstanding Rights, shall, substitute Units or Share Equivalents for some or all of the shares of Common Stock exchangeable for Rights, at the initial rate of one Unit or Share Equivalent for each share of Common Stock. The Board shall not authorize any exchange transaction referred to in Section 23(a) unless at the time such exchange is authorized there shall be sufficient shares of Common Stock (and/or Units or Share Equivalents) issued but not outstanding, or authorized but unissued, to permit the exchange of Rights as contemplated in accordance with this Section 23.

 

(e)                                  Notwithstanding anything in this Section 23 to the contrary, the exchange of the Rights as authorized by the Board may be made effective at such time, on such basis and subject to such conditions as the Board in its sole discretion may establish.

 

Section 24.                                    Notice of Proposed Actions.

 

(a)                                 In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend to the holders of record of its shares of Preferred Stock payable in stock of any class or to make any other distribution to the holders of record of its shares of Preferred Stock (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of record of its shares of Preferred Stock options, warrants, or other rights to subscribe for or to purchase shares of Preferred Stock (including any security convertible into or exchangeable for shares of Preferred Stock) or shares of stock of any class or any other securities, options, warrants, convertible or exchangeable securities or other rights, (iii) to effect any reclassification of its shares of Preferred Stock or any recapitalization or reorganization of the Company, (iv) to effect any consolidation, combination or merger with or into, or any share exchange 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 50% or more of the assets, earning power or cash flow of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to the Rights Agent and, to the extent feasible, each registered holder of a Right Certificate in accordance with Section 25, a written notice of such proposed action, which shall specify the record date for the purposes of such dividend or distribution, or the date on which such reclassification, recapitalization, reorganization, consolidation, combination, merger, share exchange, sale or transfer of assets, liquidation, dissolution, or winding up is to take place and the record date for determining participation therein by the holders of record of shares of 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 ten (10) calendar days prior to the record date for determining holders of record of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least ten (10) calendar days prior to the date of the taking of such proposed action or the date of participation therein by the holders of record of the shares of 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.

 

(b)                                 In case a Section 11(a)(ii) Event is proposed, then, in any such case, the Company shall, as soon as practicable thereafter, give to the Rights Agent and to each registered

 

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holder of Rights, to the extent feasible, in accordance with Section 25, notice of the occurrence of such event or proposal of such transaction which notice shall specify the proposed event and the consequences of the event to holders of Rights under Section 11(a)(ii), upon consummating such transaction, shall similarly give notice thereof to each holder of Rights.

 

Section 25.                                    Notices.  Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the registered holder of any Right Certificate or Right to or on behalf of the Company shall be sufficiently given or made if in writing and when sent by first-class mail, postage prepaid, addressed or by nationally recognized overnight courier (until another address is filed in writing with the Rights Agent) as follows:

 

Celadon Group, Inc.

9503 East 33rd Street

One Celadon Drive

Indianapolis, IN  46235

Attention: Thomas S. Albrecht

Executive Vice President, Chief Financial Officer and Chief Strategy Officer

Fax: (317) 972-7030

 

with a copy (which will not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, N.W.

Washington, DC 20004

Attention: Keith E. Gottfried, Esq.

Fax: (202) 739-3001

 

Subject to the provisions of Section 20, any notice or demand authorized by this Agreement to be given or made by the Company or by the registered holder of any Right Certificate or Right to or on the Rights Agent shall be sufficiently given or made if in writing and when sent by first-class mail, postage prepaid, addressed or by a nationally recognized courier service (until another address is filed in writing with the Company) as follows:

 

American Stock Transfer & Trust Company, LLC

Operations Center

6201 15th Avenue

Brooklyn, New York 11219

Attention: Corporate Trust

 

with a copy to:

 

American Stock Transfer & Trust Company, LLC

48 Wall Street, 22nd Floor

New York, NY  10005

Attention: Legal Department

Email: legalteamAST@astfinancial.com

 

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Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the registered holder of any Right Certificate or Right shall be sufficiently given or made if in writing and when sent by mail, postage prepaid, addressed to such holder at the address of such holder as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent.

 

Section 26.                                    Supplements and Amendments. Subject to extension by the Board by amendments, prior to the Close of Business on the tenth (10th) calendar day after the Stock Acquisition Date, the Company may in its sole discretion and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement (including, without limitation, amendments that increase or decrease the Purchase Price or Redemption Price or accelerate or extend the Final Expiration Date or the period in which Rights may be redeemed), without the approval of any holders of the Rights or shares of Common Stock.  From and after the Close of Business on the tenth (10th) calendar day after the Stock Acquisition Date, the Company may and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders 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 the provisions hereunder in any manner which the Company may deem necessary or desirable which shall not adversely affect the interests of the holders of Right Certificates (other than any interest of an Acquiring Person or an Affiliate or Associate of an Acquiring Person).  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 shares of Common Stock.  Notwithstanding anything contained herein to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or immunities under this Agreement.  In addition, notwithstanding anything to the contrary in this Agreement, no supplement or amendment to this Agreement shall be made that extends the Expiration Date.

 

Section 27.                                    Exemption Requests. Any Person who desires to effect any acquisition of Common Stock that would, if consummated, result in such Person Beneficially Owning 4.99% or more of the then outstanding Common Stock (or, in the case of an Existing Holder, additional shares of Common Stock) (a “Requesting Person”) may, prior to the Stock Acquisition Date, request that the Board grant an exemption with respect to such acquisition under this Agreement so that such Person would be deemed to be an “Exempt Person” under subsection (iii) of Section 1(r) hereof for purposes of this Agreement (an “Exemption Request”). Subject to the provisions of this Section 27, the Board shall have the sole discretion to establish and/or modify the process by which a Requesting Person may submit an Exemption Request, including, without limitation, the required form of an Exemption Request, and such process, once established or modified from time to time, shall be publicly disclosed, including in a filing made with the SEC. The Board shall only grant an exemption in response to an Exemption Request if the Board determines in its sole discretion that the acquisition of Beneficial Ownership of Common Stock by the Requesting Person will not limit or impair the availability to the Company of the Tax Benefits. Any exemption granted by the Board hereunder may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that the Requesting Person agree that

 

37

 

it will not acquire Beneficial Ownership of shares of Common Stock in excess of the Exempted Amount), in each case as and to the extent the Board shall determine, in its sole discretion, to be necessary or desirable to preserve the availability to the Company of the Tax Benefits. The Exemption Request shall be considered and evaluated by directors serving on the Board, or a duly constituted committee thereof, who are independent of the Company and the Requesting Person and disinterested with respect to the Exemption Request, and the action of a majority of such independent and disinterested directors shall be deemed to be the determination of the Board for purposes of such Exemption Request.

 

Section 28.                                    Successors.  All of the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section 29.                                    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, the shares of Common Stock) any legal or equitable right, remedy or claim under this Agreement, but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the shares of Common Stock).

 

Section 30.                                    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 executed and to be performed entirely within such state, without giving effect to the choice of law or conflict of law principles thereof or of any other jurisdiction to the extent that such principles would require or permit the application of the laws of another jurisdiction; provided, however, that all provisions regarding the rights, duties, and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

 

Section 31.                                    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.  In the event that any signature to this Agreement or any amendment hereto is delivered by e-mail delivery of a portable document format (.pdf or similar format) data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such “.pdf” signature page was an original thereof. No party hereto may raise the use of such electronic execution or transmission to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission, as a defense to the formation of a contract, and each party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

 

Section 32.                                    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 of this Agreement.

 

Section 33.                                    Severability. If any term, provision, covenant or restriction of this

 

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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 excluded term, provision, covenant or restriction shall materially and adversely affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately upon written notice to the Company pursuant to the requirements of Section 25 of this Agreement; and provided, further, 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 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 22 hereof shall be reinstated and shall not expire until the Close of Business on the tenth (10th) Business Day following the date of such determination by the Board.

 

Section 34.                                    Determination and Actions by the Board, etc.  Except with respect to the rights, immunities, duties or obligations of the Rights Agent hereunder, the Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board, or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (a) interpret the provisions of this Agreement, and (b) make all determinations or judgments deemed necessary or advisable for the administration of this Agreement (including without limitation a determination to redeem or not redeem the Rights or to amend this Agreement) or otherwise contemplated by this Agreement.  All such actions, calculations, interpretations, judgments and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board to any liability to the holders of the Right Certificates.  The Rights Agent is entitled always to assume the Board acted in good faith and shall be fully protected and incur no liability in reliance thereon.

 

Section 35.                                    Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.

 

Section 36.                                    Further Assurances. The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed, all as of the day and year first above written.

 

	
 
    	
CELADON GROUP, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas S Albrecht
    
	
 
    	
Name:
    	
Thomas S Albrecht
    
	
 
    	
Title:
    	
CFO, Chief Strategy Officer & EVP
    
	
 
    	
 
    	
 
    
	
 
    	
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, AS RIGHTS   AGENT
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Legregin
    
	
 
    	
Name:
    	
Michael Legregin
    
	
 
    	
Title:
    	
SVP
    

 

[Signature Page to Section 382 Tax Benefits Preservation Plan]

 

 

EXHIBIT A

 

CERTIFICATE OF DESIGNATION

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

CELADON GROUP, INC.

 

(Pursuant to Section 151 of the Delaware General Corporation Law)

 

 

Celadon Group, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of the Delaware, as amended (the “DGCL”), hereby certifies that, pursuant to the authority granted by Article Fourth of the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Restated Certificate of Incorporation”), and in accordance with Section 151 of the DGCL, the Board of Directors of the Corporation (hereinafter being referred to as the “Board of Directors” or the “Board”), at a meeting duly called and held on August 9, 2018, has adopted the following resolution with respect to the designations, number of shares, preferences, voting powers and other rights and the restrictions and limitations thereof, of the Series A Junior Participating Stock:

 

RESOLVED, that, pursuant to the authority granted to and vested in the Board of Directors in accordance with the provisions of the Restated Certificate of Incorporation, the designations, number of shares, preferences, voting powers and other rights and the restrictions and limitations thereof of the Series A Junior Participating Stock are as follows:

 

1.                                      Designation and Amount.  The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 40,000. Such number of shares may be increased or decreased by resolution of the Board of Directors prior to issuance; provided, that no decrease shall reduce the number of shares of the Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into the Series A Preferred Stock; provided, further, that if more than a total of 40,000 shares of Series A Preferred Stock shall be issuable upon the exercise of Rights (the “Rights”) issued pursuant to the Section 382 Tax Benefits Preservation Plan, dated as of August 9, 2018, by and between the Corporation and American Stock Transfer & Trust Company, LLC, as Rights Agent, the Board of Directors of the Corporation, pursuant to Section 151(g) of the DGCL, shall direct by resolution or resolutions that a certificate be properly executed, acknowledged, filed and recorded, in accordance with the provisions of Section 103 of the DGCL, providing for the total number of shares of Series A Preferred Stock authorized to be issued to be increased (to the extent that the Restated Certificate of Incorporation then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights.

 

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2.                                      Dividends and Distributions.

 

(a)                                 Subject to the rights of the holders of any shares of any series of Preferred Stock of the Corporation (the “Preferred Stock”) (or any similar stock) ranking prior and superior to the shares of Series A Preferred Stock with respect to dividends, the holders of shares of the Series A Preferred Stock, in preference to the holders of common stock, par value $0.033 per share, of the Corporation (the “Common Stock”) and of any other stock of the Corporation ranking junior to the Series A Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Corporation legally available for the payment of dividends, quarterly dividends payable in cash on the last day of each fiscal quarter of the Corporation in each year, or such other dates as the Board of Directors shall approve (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 the Series A Preferred Stock (the “Issue Date”), in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of the 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 Series A Preferred Stock. In the event the Corporation shall at any time after the Issue Date (A) declare and pay any dividend on the Common Stock payable in shares of Common Stock, or (B) effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (ii) 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.  In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (ii) of the first sentence of this Section 2(a) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.

 

(b)                                 The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (a) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); and the Corporation shall pay such dividend or distribution on the Series A Preferred Stock before the dividend or distribution declared on the Common Stock is paid or set apart; provided that, in the event no dividend or distribution shall have been declared on the Common Stock during

 

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the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable, when, as and if declared, on such subsequent Quarterly Dividend Payment Date.

 

(c)                                  Dividends shall begin to accrue and be cumulative, whether or not declared, on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A 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.                                      Voting Rights.  The holders of shares of Series A Preferred Stock shall have the following voting rights:

 

(a)                                 Subject to the provision for adjustment hereinafter set forth and except as otherwise provided in the Restated Certificate of Incorporation or required by law, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters upon which the holders of the Common Stock of the Corporation are entitled to vote. In the event the Corporation shall at any time after the Issue Date (i) declare or pay any dividend on the Common Stock payable in shares of Common Stock, or (ii) effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A 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.  In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.

 

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(b)                                 Except as otherwise provided herein, in the Restated Certificate of Incorporation or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, and except as otherwise required by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

(c)                                  (i)                                     If at any time dividends on any Series A Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the holders of the Series A Preferred Stock, voting as a separate series from all other series of Preferred Stock and classes of capital stock, shall be entitled to elect two members of the Board in addition to any Directors elected by any other series, class or classes of securities and the authorized number of Directors will automatically be increased by two.  Promptly thereafter, the Board of the Corporation shall, as soon as may be practicable, call a special meeting of holders of Series A Preferred Stock for the purpose of electing such members of the Board.  Such special meeting shall in any event be held within 45 calendar days of the occurrence of such arrearage.

 

(ii)                                  During any period when the holders of Series A Preferred Stock, voting as a separate series, shall be entitled and shall have exercised their right to elect two Directors, then, and during such time as such right continues, (a) the then authorized number of Directors shall be increased by two, and the holders of Series A Preferred Stock, voting as a separate series, shall be entitled to elect the additional Directors so provided for, and (b) each such additional Director shall serve until the next annual meeting of stockholders for the election of Directors, or until his or her successor shall be elected and shall qualify, or until his or her right to hold such office terminates pursuant to the provisions of this Section 3(c).

 

(iii)                               A Director elected pursuant to the terms hereof may be removed with or without cause by the holders of Series A Preferred Stock entitled to vote in an election of such Director.

 

(iv)                              If, during any interval between annual meetings of stockholders for the election of Directors and while the holders of Series A Preferred Stock shall be entitled to elect two Directors, there is no such Director in office by reason of resignation, death or removal, then, promptly thereafter, the Board shall call a special meeting of the holders of Series A Preferred Stock for the purpose of filling such vacancy and such vacancy shall be filled at such special meeting.  Such special meeting shall in any event be held within 45 calendar days of the occurrence of such vacancy.

 

(v)                                 At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on any shares of Series A Preferred Stock outstanding are paid, and, in addition thereto, at least one regular dividend has been paid subsequent to curing such arrearage, the term of office of any Director elected pursuant to this Section 3(c), or his successor, shall automatically terminate, and the authorized number of Directors shall automatically decrease by two, the rights of the holders of the shares of the Series A Preferred Stock to vote as provided in this Section 3(c) shall cease, subject to renewal from time to time upon the same terms and conditions, and the holders of shares of the Series A Preferred Stock shall have only the limited voting rights elsewhere herein set forth.

 

A-4

 

(d)                                 Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

 

4.                                      Certain Restrictions.

 

(a)                                 Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 hereof are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

(i)                                     declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

 

(ii)                                  declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

(iii)                               redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock or rights, warrants or options to acquire such junior stock; or

 

(iv)                              redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

 

(b)                                 The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the 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.

 

5.                                      Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued, without designation as to series until such shares are once more designated as part of a particular series of Preferred Stock by resolution or

 

A-5

 

resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Restated Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

 

6.                                      Liquidation, Dissolution or Winding Up.

 

(a)                                 Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of the Common Stock or of shares of any other stock of the Corporation ranking junior, either as to dividends or upon liquidation, dissolution or winding up, to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (ii) to the holders of shares of stock ranking on a parity either as to dividends or upon liquidation, dissolution or winding up with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Preferred Stock liquidation preference and the liquidation preferences of all other classes and series of stock of the Corporation, if any, that rank on a parity with the Series A Preferred Stock in respect thereof, then the assets available for such distribution shall be distributed ratably to the holders of the Series A Preferred Stock and the holders of such parity shares in the proportion to their respective liquidation preferences. In the event the Corporation shall at any time after the Issue Date (A) declare or pay any dividend on the Common Stock payable in shares of Common Stock, or (B) effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (i) of this Section 6(a) 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.  In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (i) of this Section 6(a) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.

 

(b)                                 Neither the merger, consolidation or other business combination of the Corporation into or with another entity nor the merger, consolidation or other business

 

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combination of any other entity into or with the Corporation (nor the sale, lease, exchange or conveyance of all or substantially all of the property, assets or business of the Corporation) shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.

 

7.                                      Consolidation, Merger, etc. Notwithstanding anything to the contrary contained herein, in case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are converted into, exchanged for or changed into other stock or securities, cash and/or any other property (payable in kind), then in any such case each share of Series A Preferred Stock shall at the same time be similarly converted into, exchanged for or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 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 converted or exchanged. In the event the Corporation shall at any time after the Issue Date (i) declare or pay any dividend on the Common Stock payable in shares of Common Stock, or (ii) effect a subdivision or combination or consolidation (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) of the outstanding 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 conversion, exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.  In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the amount set forth in the first sentence of this Section 7 with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.

 

8.                                      No Redemption. The shares of Series A Preferred Stock shall not be redeemable from any holder.

 

9.                                      Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, junior to all series of any other class of the Preferred Stock issued either before or after the issuance of the Series A Preferred Stock, unless the terms of any such series shall provide otherwise, and shall rank senior to the Common Stock.

 

10.                               Amendment. At such time as any shares of Series A Preferred Stock are outstanding, if any proposed amendment to the Restated Certificate of Incorporation (including this Certificate of Designation) would materially alter, change or repeal any of the preferences, powers or special rights given to the Series A Preferred Stock so as to affect the Series A Preferred Stock adversely, then the holders of the Series A Preferred Stock shall be entitled to vote separately

 

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as a class upon such amendment, and the affirmative vote of two-thirds of the outstanding shares of the Series A Preferred Stock, voting separately as a single class, shall be necessary for the adoption thereof, in addition to such other vote as may be required by the DGCL.

 

11.                               Fractional Shares. Series A Preferred Stock may be issued in fractions of a share that 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 Series A Preferred Stock.

 

IN WITNESS WHEREOF, the undersigned have signed and attested this Certificate of Designation on the 9th day of August 2018.

 

	
 
    	
CELADON GROUP, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

	
Attest:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
, Secretary
    	
 
    
				

 

A-8

 

EXHIBIT B

 

FORM OF RIGHT CERTIFICATE

 

	
Certificate   No. R-
    	
           Rights
    

 

NOT EXERCISABLE AFTER AUGUST 9, 2021, SUBJECT TO EARLIER REDEMPTION, EXCHANGE OR EXPIRATION PURSUANT TO THE SECTION 382 TAX BENEFITS PRESERVATION PLAN.  THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE, IN EACH CASE AT THE OPTION OF THE COMPANY ON THE TERMS SET FORTH IN THE SECTION 382 TAX BENEFITS PRESERVATION PLAN. THE RIGHTS EVIDENCED BY THIS CERTIFICATE 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.  THE BENEFICIAL OWNER OF THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE MAY BE AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE (AS DEFINED IN THE SECTION 382 TAX BENEFITS PRESERVATION PLAN) OF AN ACQUIRING PERSON OR A SUBSEQUENT HOLDER OF A RIGHT CERTIFICATE BENEFICIALLY OWNED BY SUCH PERSONS.  ACCORDINGLY, UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE SECTION 382 TAX BENEFITS PRESERVATION PLAN, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

RIGHT CERTIFICATE

 

CELADON GROUP, 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 Section 382 Tax Benefits Preservation Plan, dated as of August 9, 2018, as amended, restated, renewed or extended from time to time (the “Plan”) between Celadon Group, Inc., a Delaware corporation (“Company”), and American Stock Transfer & Trust Company, LLC, as Rights Agent (“Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Plan) and prior to 5:00 P.M., New York City time, on August 9, 2021, at the office or offices of the Rights Agent, or its successors as Rights Agent, designated for such purpose, one one-thousandth of a fully paid, nonassessable share of Series A Junior Participating Preferred Stock, par value $1.00 per share, of the Company (a “Unit”), at a purchase price of $15.00 per Unit, as the same may from time to time be adjusted in accordance with the Plan (“Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and included Certificate duly completed and executed.

 

Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the Plan. This Right Certificate is subject to all of the terms, provisions and

 

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conditions of the Plan, which terms, provisions and conditions are incorporated herein by reference and made a part hereof and to which Plan reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities of the Rights Agent, the Company and the registered holders of the Right Certificates.  Copies of the Plan are on file at the principal executive office of the Company and the office of the Rights Agent designated for such purpose and will be mailed to stockholders upon written request to the Rights Agent.

 

As provided in the Plan, the Purchase Price and the number of Units 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 and, upon the happening of certain events, shares of Common Stock or other securities other than Units, or other property, may be acquired upon exercise of the Rights evidenced by this Right Certificate.

 

As more fully set forth in the Plan, from and after the first occurrence of a Section 11(a)(ii) Event (as such term is defined in the Plan), if the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms are defined in the Plan), (ii) a transferee of such Acquiring Person (or of any such Associate or Affiliate), or (iii) under certain circumstances specified in the Plan, a transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with such Acquiring Person becoming such, such Rights shall become null and void without any further action, and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event, whether under the Plan or otherwise.

 

This Right Certificate, with or without other Right Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the registered holder to purchase a like aggregate number of Units as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled the holder to purchase.  If this Right Certificate shall be exercised in part, the holder shall be entitled to receive, upon surrender hereof, the Right Certificate indicating the remaining Rights represented thereby or another Right Certificate or Right Certificates for the number of Rights not exercised.

 

Subject to the provisions of the Plan, at any time prior to the earlier of the Close of Business on (i) the tenth (10th) calendar day after the Stock Acquisition Date (or, if the tenth (10th) calendar day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), and (ii) the Final Expiration Date, or under certain other conditions as specified in the Plan, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $0.001 per Right (the total amount paid to any holder of Rights to be rounded up to the nearest $0.01), payable in cash, Common Stock or other form of consideration, as determined by the Board, in the exercise of its sole discretion. The redemption of the Rights may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.

 

In addition, subject to the provisions of the Plan, after the later of the Stock Acquisition Date or the Distribution Date, at the option of the Board, the then-outstanding and exercisable Rights (which shall not include Rights held by the Acquiring Person that shall have become null

 

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and void and nontransferable pursuant to the provisions of the Plan) may be exchanged, in whole or in part, for shares of Common Stock at an exchange rate of one share of Common Stock for each Right (subject to adjustment). Notwithstanding the foregoing, (1) the Board shall not effect an exchange at any time after any Acquiring Person shall have become the Beneficial Owner of 50% or more of the Common Stock then outstanding; and (2) the Board may (but shall not be required to) determine that a holder of Rights shall not be entitled to receive shares of Common Stock that would result in such holder becoming the Beneficial Owner of 4.99% or more of the shares of Common Stock then outstanding. In any such exchange, the Company, at its option, may, and to the extent there are an insufficient number of authorized shares of Common Stock not reserved for any other purpose to exchange for all of the outstanding Rights, shall, substitute Units or other securities of the Company for some or all of the shares of Common Stock exchangeable for Rights such that the aggregate value received by a holder of Rights in exchange for each Right is substantially the same value as one share of Common Stock. The exchange of the Rights by the Company may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.

 

Immediately upon the action of the Board authorizing any redemption or exchange of the Rights, and without any further action or any notice, the Rights (other than Rights that are not subject to such redemption or exchange) will terminate and the Rights will only enable holders to receive the redemption price without any interest thereon or the shares issuable upon such exchange, as applicable.

 

No fractional Units, shares of Common Stock or other securities (other than fractions of a share of Preferred Stock represented by Units) shall be required to be issued upon the exercise of any Right or Rights evidenced hereby, and in lieu thereof, as provided in the Plan, a holder otherwise entitled to fractions of shares of Common Stock, Units or other securities (other than fractions of a share of Preferred Stock represented by Units) may receive an amount in cash equal to the same fraction of the then current value of a share of Common Stock or such other securities.

 

No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Units, shares of Preferred Stock, shares of Common Stock or of any other securities of the Company which may at any time be issuable upon the exercise hereof, nor shall anything contained in the Plan 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 Plan) 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 Plan. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

 

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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal, dated as of              ,     .

 

	
 
    	
CELADON GROUP, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Countersigned:
    
	
 
    	
 
    
	
 
    	
AMERICAN STOCK   TRANSFER & TRUST COMPANY, LLC, as Rights Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

B-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)

 

 

Rights evidenced by 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:              , 20

 

	
 
    	
 
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
(Signature   must conform in all respects to the name of holder as written upon the face   of this Right Certificate, without alteration or enlargement or any change   whatsoever.)
    

 

Signature Guaranteed:*

 

* Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, at a guarantee level reasonably satisfactory to the Rights Agent. A notary public is not sufficient guarantee of a signature.

 

B-5

 

Certificate

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1)                                 the Rights evidenced by this Right Certificate

 

o are

 

o are not

 

being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Plan);

 

(2)                                 after due inquiry and to the best knowledge of the undersigned, the undersigned

 

o did

 

o did not

 

acquire the Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.

 

Dated:               , 20

 

	
Signature:
    	
 
    	
 
    
	
 
    	
 
    
	
(Signature   must conform in all respects to the name of holder as written upon the face   of this Right Certificate, without alteration or enlargement or any change   whatsoever.)
    	
 
    

 

Signature Guaranteed:*

 

* Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, at a guarantee level reasonably satisfactory to the Rights Agent. A notary public is not sufficient guarantee of a signature.

 

B-6

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if registered holder desires to Exercise the Right Certificate.)

 

To: CELADON GROUP, INC.

 

The undersigned hereby irrevocably elects to exercise              Rights represented by this Right Certificate to purchase the number of one one-thousandths of a share of Preferred Stock, shares of Common Stock or other securities issuable upon the exercise of such Rights and requests that certificates representing such share(s) or other securities 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 remaining 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:                ,   20
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
(Signature   must conform in all respects to the name of holder as written upon the face   of the Right Certificate, without alteration or enlargement or any change   whatsoever.)
    
	
 
    	
 
    
	
Signature   Guaranteed:*
    	
 
    

 

* Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, at a guarantee level reasonably satisfactory to the Rights Agent. A notary public is not sufficient guarantee of a signature.

 

B-7

 

Certificate

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1)                                 the Rights evidenced by this Right Certificate

 

o are

 

o are not

 

being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Plan);

 

(2)                                 after due inquiry and to the best knowledge of the undersigned, the undersigned

 

o did

 

o did not

 

acquire the Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any transferee of such Persons.

 

Dated:               , 20

 

	
Signature:
    	
 
    	
 
    
	
 
    	
 
    
	
(Signature   must conform in all respects to the name of holder as written upon the face   of this Right Certificate, without alteration or enlargement or any change   whatsoever.)
    	
 
    
	
 
    	
 
    
	
Signature   Guaranteed:*
    	
 
    

 

* Signature must be guaranteed by an “Eligible Guarantor Institution” pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, at a guarantee level reasonably satisfactory to the Rights Agent. A notary public is not sufficient guarantee of a signature.

 

B-8

 

EXHIBIT C

 

UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE SECTION 382 TAX BENEFITS PRESERVATION PLAN, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE SECTION 382 TAX BENEFITS PRESERVATION PLAN) AND CERTAIN TRANSFEREES THEREOF SHALL BECOME NULL AND VOID AND SHALL NO LONGER BE TRANSFERABLE.

 

CELADON GROUP, INC.

 

SUMMARY OF THE TERMS OF THE RIGHTS
 TO PURCHASE UNITS OF PREFERRED STOCK

 

On August 9, 2018, the Board of Directors (the “Board” or “Board of Directors”) of Celadon Group, Inc., a Delaware corporation (the “Company”), declared a dividend distribution of one purchase right (a “Right”) for each outstanding share of Common Stock, par value $0.033 per share (the “Common Stock”), of the Company, payable to stockholders of record on August 20, 2018, and issuable as of that date.  Except in the circumstances described below, each Right, when it becomes exercisable, entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, $1.00 par value, of the Company (“Preferred Stock” and each one one-thousandth of a share of Preferred Stock, a “Unit”) at a price of $15.00 per Unit (the “Purchase Price”). The rights of a holder of a Unit are substantially equivalent to the rights of a holder of a share of Common Stock.  The description and terms of the Rights are set forth in a Section 382 Tax Benefits Preservation Plan (the “Plan”) between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (the “Rights Agent”).

 

The Company has generated substantial operating losses (“NOLs”) in previous years which, under the Internal Revenue Code of 1986, as amended (the “Code”), the Company may in certain circumstances use to offset current and future earnings and thus reduce its future federal income tax liability (subject to certain requirements and restrictions).  However, if the Company experiences an “Ownership Change,” as defined in Section 382 of the Code and the regulations promulgated thereunder by the U.S. Department of the Treasury (“Section 382”), its ability to use these NOLs could be substantially limited or lost altogether.  In order to seek to avoid an “Ownership Change” and protect stockholder value, the Board of Directors adopted the Plan.

 

As discussed below, initially the Rights will not be exercisable, certificates will not be sent to stockholders and the Rights will automatically trade with the Common Stock. The Rights will be evidenced by Common Stock certificates, and Rights relating to any uncertificated shares of Common Stock registered in book entry form will be represented by notation in book entry on the records of the Company, until the close of business on the earlier to occur of (i) the tenth (10th)

 

C-1

 

calendar day (or such later date as may be determined by the Board) after the day on which a public announcement or filing with the U.S. Securities and Exchange Commission (the “SEC”) is made indicating that a person has become an “Acquiring Person,” which is defined as a person who, from and after the first public announcement by the Company of the adoption of the Plan, becomes the beneficial owner of 4.99% or more of the Common Stock of the Company then outstanding, subject to certain exceptions as described below (the “Stock Acquisition Date”), or (ii) the tenth (10th) calendar day (or such later date as may be determined by the Board) after the date of the commencement by any person (other than certain exempted persons) of, or the first public announcement of the intent of any person (other than certain exempted persons) to commence, a tender or exchange offer by or on behalf of a person the successful consummation of which would result in any  person (other than certain exempted persons) becoming an Acquiring Person, irrespective of whether any shares are actually purchased or exchanged pursuant to such offer (the earlier of these dates is called the “Distribution Date”).

 

The Plan provides that until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), the Rights will be transferred only with the Common Stock. Until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), new Common Stock certificates issued after the close of business on the Record Date upon transfer or new issuance of the Common Stock will contain a notation incorporating the Plan by reference, and the Company will deliver a notice to that effect upon the transfer or new issuance of book entry shares

 

As soon as practicable following a Distribution Date, the Rights Agent will, if requested to do so by the Company, mail separate certificates evidencing the Rights (“Right Certificates”) to holders of record of shares of the Common Stock as of the close of business on the Distribution Date, and those separate certificates alone will evidence the Rights from and after the Distribution Date.

 

Each of the following persons will not be deemed to be an Acquiring Person, even if they have acquired, or obtained the right to acquire, beneficial ownership of 4.99% or more of the shares of Common Stock of the Company then outstanding: (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan or employee stock plan of the Company or any Subsidiary of the Company, or any person organized, appointed, established or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan; (iv) any “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii); (v) any person who becomes the beneficial owner of 4.99% or more of the shares of Common Stock of the Company then outstanding solely as a result of the initial grant or vesting of any options, warrants, rights or similar interests (including restricted shares and restricted stock units) by the Company to its directors, officers and employees pursuant to any employee benefit or stock ownership plan of the Company, or the acquisition of shares of Common Stock of the Company upon the exercise or conversion of any such securities so granted; (vi) any person who as the result of an acquisition of shares of Common Stock by the Company (or any Subsidiary of the Company, any employee benefit plan or employee stock plan of the Company or any Subsidiary of the

 

C-2

 

Company, or any person organized, appointed, established or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan) which, by reducing the number of shares of Common Stock outstanding, increases the proportionate number of shares of Common Stock beneficially owned by the person to 4.99% or more of the shares of Common Stock then outstanding, unless and until such person, or any Affiliate of such person, following the first public announcement by the Company of such share acquisition, acquires beneficial ownership of any additional shares of Common Stock (other than pursuant to a stock split, reverse stock split, stock dividend, reclassification or similar transaction effected by the Company); or (vii) any person who or which, within ten (10) business days of being requested by the Company to advise it regarding the same, certifies to the Company that such person had become an Acquiring Person inadvertently (including, without limitation, because (A) such person was unaware that it beneficially owned a percentage of Common Stock that would otherwise cause such person to be an “Acquiring Person,” or (B) such person was aware of the extent of its beneficial ownership of Common Stock but had no actual knowledge of the consequences of such beneficial ownership under the Plan), and who or which thereafter within ten (10) business days following such certification reduces such person’s beneficial ownership to less than 4.99% of the shares of Common Stock then outstanding; provided, however, that (x) if the person requested to so certify fails to do so within ten (10) business days or breaches or violates such certification, then such person shall become an Acquiring Person immediately after such ten (10) business day period or such breach or violation or (y) if the person fails to reduce beneficial ownership to less than 4.99% within ten (10) business days following such certification, then such person shall become an Acquiring Person immediately after such ten (10) business day period.  In addition, no person shall be an Acquiring Person if the Board shall have affirmatively determined in light of the intent and purposes of the Plan or other circumstances facing the Company, that such person should not be deemed an Acquiring Person.

 

Under the Plan, beneficial ownership of shares is determined in accordance with the applicable rules of Section 382 of the Internal Revenue Code. Subject to the specific definition of “beneficial ownership” included in the Section 382 Tax Benefits Preservation Plan and the various exceptions to such definition that are provided therein, beneficial ownership generally includes any securities which such person would otherwise be deemed to actually or constructively own for purposes of Section 382 or the Treasury Regulations promulgated thereunder. Accordingly, a person (other than any “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii)) will be treated as the beneficial owner of 4.99% or more shares of the Common Stock if, in the determination of the Board, that person (individually, or together with other persons) would be treated as a “5-percent stockholder” for purposes of Section 382 (substituting “4.99” for “5” each time “five” or “5” is used in or for purposes of Section 382). In addition, the Section 382 Tax Benefits Preservation Plan provides that, notwithstanding anything to the contrary contained therein, no person shall be deemed the beneficial owner of, or to beneficially own, any securities of the Company for purposes of the Section 382 Tax Benefits Preservation Plan if (i) such securities would not be deemed constructively or otherwise owned by, or otherwise aggregated with shares owned by, such person, and (ii) such securities would not be deemed constructively or otherwise owned by a single “entity,” in each case, for purposes of Section 382.

 

C-3

 

The Plan also provides that any person who beneficially owned 4.99% or more of the Common Stock immediately prior to the first public announcement by the Company of the adoption of the Plan (each an “Existing Holder”), shall not be deemed to be an “Acquiring Person” for purposes of the Plan unless and until an Existing Holder becomes the beneficial owner of one or more additional shares of Common Stock after the first public announcement by the Company of the adoption of the Plan (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock, pursuant to a split, reclassification or subdivision of the outstanding Common Stock or pursuant to the acquisition of beneficial ownership of Common Stock upon the vesting or exercise of any option, warrants or other rights, or upon the initial grant or vesting of restricted stock, granted or issued by the Company to its directors, officers and employees, pursuant to a compensation or benefits plan or arrangement adopted by the Board). However, if upon acquiring beneficial ownership of one or more additional shares of Common Stock after the first public announcement by the Company of the adoption of the Plan, the Existing Holder does not beneficially own 4.99% or more of the Common Stock then outstanding, the Existing Holder will not be treated as an “Acquiring Person” for purposes of the Plan.

 

Any person who desires to effect an acquisition of Common Stock that would, if consummated, result in such person beneficially owning 4.99% or more of the then outstanding Common Stock or any Existing Holder who desires to effect an acquisition of additional Common Stock may, prior to acquiring the Common Stock, request that the Board exempt such acquisition of additional Common Stock from causing such person from being deemed an Acquiring Person. The Plan provides that the Board (or a committee thereof) may only grant an exemption if the Board (or a committee thereof) determines that the acquisition of beneficial ownership of Common Stock will not limit or impair the availability to the Company of the NOLs. Any exemption granted by the Board (or a committee thereof) may be granted in whole or in part, and may be subject to limitations or conditions the Board (or a committee thereof) determines, in its sole discretion, to be necessary or desirable to preserve the availability to the Company of the NOLs. Each exemption request will be considered and evaluated by directors serving on the Board (or a committee thereof) who are independent of the Company and the party requesting the exemption and disinterested with respect to that specific exemption request. The decision of a majority of the independent and disinterested directors (or a committee of the Board) is deemed to be the determination of the Board with respect to any request for exemption from the Plan.

 

The Rights are not exercisable until after the Distribution Date and until such time as the Rights are no longer redeemable by the Board. The Rights will expire upon the earliest of (i) the date on which all of the Rights are redeemed as described below, (ii) the date on which the Rights are exchanged as described below, (iii) the consummation of a reorganization transaction entered into by the Company resulting in the imposition of stock transfer restrictions that the Board determines, in its sole discretion, will provide protection for the Company’s tax attributes similar to that provided by the Plan, (iv) the close of business on the effective date of the repeal of Section 382, or any other change, if the Board determines, in its sole discretion, that the Plan is no longer necessary or desirable for the preservation of the Company’s tax attributes, (v) the date on which the Board otherwise determines, in its sole discretion, that the Plan is no longer necessary to

 

C-4

 

preserve the Company’s tax attributes, (vi) the beginning of a taxable year of the Company to which the Board determines, in its sole discretion, that none of the Company’s tax attributes may be carried forward, (vii) the date on which the Board determines, in its sole discretion, prior to the time any person becomes an Acquiring Person, that the Plan and the Rights are no longer in the best interests of the Company and its stockholders, and (viii) the close of business on August 9, 2021.

 

The Purchase Price, and the number of Units, shares of Common Stock or other securities or property issuable upon exercise of the Rights, are subject to adjustment from time to time to prevent the dilution that may occur as a result of certain events, including: (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock; (ii) upon the grant to holders of Preferred Stock of certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock; or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding dividends payable in Preferred Stock) or of subscription rights or warrants (subject to certain exceptions).  The Purchase Price is also subject to adjustment from time to time in the event of a Common Stock dividend on, a subdivision or split of, or a combination, consolidation or reverse split of, the shares of Common Stock. With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an increase or decrease of at least one percent (1%) in such Purchase Price.

 

In the event that any Person becomes an Acquiring Person and a Distribution Date occurs, then, from and after the time that the Rights are no longer redeemable by the Company, each holder of record of a Right (other than the Acquiring Person) will thereafter have the right to receive, upon payment of the Purchase Price, that number of shares of Common Stock having a market value (as determined immediately prior to the time the person becomes an Acquiring Person and whether or not such Right was then exercisable) equal to two times the Purchase Price.  Any Rights that are or were at any time, on or after the Distribution Date, beneficially owned by an Acquiring Person will become null and void and nontransferable. After such an event, to the extent that insufficient shares of Common Stock are available for the exercise in full of the Rights, holders of Rights will receive upon exercise a number of shares of Common Stock to the extent available and then Units or other securities of the Company, other assets, cash, or any combination of the foregoing, in proportions determined by the Company, such that the aggregate value received is equal to two times the Purchase Price.

 

No fractional shares of Common Stock or Units will be required to be issued upon exercise of the Rights and, in lieu thereof, a payment in cash equal to the fraction of the then current value of a share of Common Stock may be made.

 

Subject to the provisions of the Plan, at any time after the later of the Stock Acquisition Date or the Distribution Date, the Board may, at its option, cause the Company to exchange all or part of the then-outstanding and exercisable Rights (other than those Rights held by an Acquiring Person which will have become null and void and nontransferable) for shares of Common Stock

 

C-5

 

at an exchange rate of one share of Common Stock for each Right (subject to adjustment). Notwithstanding the foregoing, (1) the Board shall not effect an exchange at any time after any Acquiring Person shall have become the Beneficial Owner of 50% or more of the Common Stock then outstanding; and (2) the Board may (but shall not be required to) determine that a holder of Rights shall not be entitled to receive shares of Common Stock that would result in such holder becoming the beneficial owner of 4.99% or more of the shares of Common Stock then outstanding. In any such exchange, the Company, at its option, may, and to the extent there are an insufficient number of authorized shares of Common Stock not reserved for any other purpose to exchange for all of the outstanding Rights, shall, substitute Units or other securities of the Company for some or all of the shares of Common Stock exchangeable for Rights such that the aggregate value received by a holder of Rights in exchange for each Right is substantially the same value as one share of Common Stock. The exchange of the Rights by the Company may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.

 

Subject to the provisions of the Plan, at any time prior to the earlier of the close of business on (i) the tenth (10th) calendar day after the Stock Acquisition Date (or, if the tenth (10th) calendar day after the Stock Acquisition Date occurs before the Record Date, the close of business on the Record Date), and (ii) the Final Expiration Date, or under certain other conditions as specified in the Plan, the Board may, at its option, cause the Company to redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the total amount paid to any holder of Rights to be rounded up to the nearest $0.01), payable in cash, Common Stock or other form of consideration, as determined by the Board, in the exercise of its sole discretion. The redemption of the Rights may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.

 

Immediately upon the action of the Board authorizing exchange or redemption of the Rights, the right to exercise the Rights (other than Rights that are not subject to such exchange or redemption) will terminate, and the only right of the holders of Rights will be to receive (if applicable) the shares of Common Stock or other consideration issuable in connection with the exchange or the Redemption Price without any interest thereon.

 

Subject to extension by the Board by amendments to the Plan, prior to the close of business on the tenth (10th) calendar day after the Stock Acquisition Date, the Company may, in its sole discretion, supplement or amend any provision of the Plan in any manner (including, without limitation, amendments that increase or decrease the Purchase Price or Redemption Price or accelerate or extend the Final Expiration Date or the period in which Rights may be redeemed), without the approval of any holders of the Rights or shares of Common Stock. The Company may also amend the Plan from and after the close of business on the tenth (10th) calendar day after the Stock Acquisition Date, without the approval of any holders of Right Certificates, to cure ambiguities, to correct or supplement any provision of the Plan which may be defective or inconsistent with any other provisions therein, to shorten or lengthen any time period under the Plan, or to otherwise change or supplement the Plan in any manner that the Company may deem

 

C-6

 

necessary or desirable and which does not adversely affect the interests of holders of the Rights (other than the interest of an Acquiring Person or an Affiliate or Associate of an Acquiring Person).

 

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 distribution of the Rights should not be taxable to stockholders under presently existing federal income tax law. However, if the Rights become exercisable or are redeemed, stockholders may recognize taxable income, depending on the circumstances then existing.

 

A copy of the Plan is included as an Exhibit to a Current Report on Form 8-K that the Company filed with the SEC on August 10, 2018.  In addition, a copy of the Plan is available free of charge from the Company.  This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Plan, which is incorporated in this summary description by reference.

 

C-7Exhibit

Exhibit 10.1

Execution Copy

LICENSE AGREEMENT

This License Agreement (“Agreement”) is entered into as of August 6, 2018 (“Effective Date”) between Cleveland BioLabs, Inc., a Delaware corporation (“CBLI”) and Genome Protection, Inc., a Delaware corporation (“GPI”).

BACKGROUND

CBLI and Everon BioSciences, Inc., a New York corporation (“Everon”) see a mutually beneficial opportunity in establishing a new company to pursue the development and commercialization of drugs for the prevention and treatment of aging and age-related diseases in humans.  CBLI and Everon have caused GPI to be formed for the purposes of pursuing such opportunities.   

CBLI is making a capital contribution to GPI pursuant to the certain Contribution and Subscription Agreement effective as of the Effective Date, pursuant to which CBLI is making an assignment of certain CBLI patent rights and related intellectual property and is granting GPI an exclusive license (or sublicense) of certain other CBLI patent rights and related intellectual property rights as well as the supply of certain products pursuant to this Agreement.  

This Agreement sets forth the terms and conditions of the exclusive license and sublicense that constitutes integral part of CBLI’s capital contribution to GPI.

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CBLI and GPI agree as follows:

1.  DEFINITIONS.

1.1 Defined Terms.  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning set forth below.

“Affiliate” means with respect to either party, any Person so long as such Person that, directly or indirectly, is controlled by, controls or is under common control with such party.  For purposes of this definition only, “control” means, with respect to any Person, the direct or indirect ownership of more than fifty percent (50%) of the voting or income interest in such Person (or such lesser maximum percentage permitted in those jurisdictions where majority ownership by foreign entities is prohibited) or the possession otherwise, directly or indirectly, of the power to direct the management or policies of such Person.

“Applicable Laws” means any national, supra-national, federal, state or local laws, treaties, statutes (including the FD&C Act), ordinances, rules and regulations, including any rules, regulations, guidance or guidelines having the final and binding effect of law, or requirements of Regulatory Authorities, national securities exchanges or securities listing organizations, government authorities, courts, tribunals, agencies other than Regulatory Authorities, legislative bodies and commissions that are in effect from time to time during the term of the Agreement. For clarification, Applicable Laws include then-current and applicable good laboratory, medical, clinical and manufacturing practices.

“BLA” means a biologicals license application, as defined in the FD&C Act, or any equivalent document filed with the FDA and necessary for the commercial distribution of a biologicals product for humans or any application or other documentation filed with any Regulatory Authority of a country other than the U.S. required for commercial distribution of any biologicals product for humans in that country.

“Business Day” means any day other than a Saturday, a Sunday, or a national holiday in the United States.

“CBLI Field”  means the prevention or treatment of any disease or condition in humans that is caused by the recent exposure to ionizing radiation including mitigation and prevention of Acute Radiation Syndrome (as defined by the Center for Disease Control and Prevention) and concurrent radiation treatment of humans or animals diagnosed with oncological conditions at the time of treatment to treat this condition.  For the avoidance of doubt, it is understood and agreed that the CBLI Field shall not include (i) prevention or treatment of sickness, diseases, disorders, and frailties caused by prior exposure to radiation treatment of cancer, and (ii) prevention or treatment of any disease, disorder or frailty in humans that are “cancer survivors” (i.e., persons who has completed initial cancer management and has no apparent evidence of active disease).

“CBLI Intellectual Property” means Know-How, including Program Intellectual Property, other than Joint Program Intellectual Property, that is Controlled by CBLI or its Affiliates during the term of this Agreement and that is reasonably necessary or useful for or directly related to the Development, Manufacture or Commercialization of the Provided Product.  The term CBLI Intellectual Property does not include (a) any Know-How, which is, as of the Effective Date or later becomes, generally available to the public, excluding CBLI Confidential Information or Know-How Controlled by CBLI or its Affiliates that is publicly disclosed by a Third Party without the consent of CBLI, and Know-How included in CBLI Patent Rights.

“CBLI Patent Rights” means those Patent Rights that Cover CBLI Intellectual Property and are Controlled by CBLI or its Affiliates at any time during the term of this Agreement. CBLI Patent Rights as of the Effective Date are listed in Schedule A-1 and Schedule A-2 which shall be updated in writing from time to time, at least annually, during the term of this Agreement.  

“Commercially Reasonable Efforts” means (a) with respect to any objective of any party, commercially reasonable, diligent, good faith efforts to accomplish such objective as such party would normally use to accomplish a similar objective under similar circumstances; and (b) with respect to any objective relating to the Development or Commercialization of the Product for any indication by any party, efforts and resources normally used by such party with respect to a product owned by such party or a product for which such party is granted by a Third Party an exclusive right to develop and commercialize which is of similar market potential at a similar stage in the development or life of such product, taking into account issues of safety, efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved, profitability of the product and other relevant commercial factors.  Commercially Reasonable Efforts shall be determined on a market-by-market and indication-by-indication basis for the Product, and it is anticipated that the level of effort may be different for different markets and may change over time, reflecting changes in the status of the Product and the indications and/or market(s) involved.

“Commercialization” means any and all activities of importing, exporting, marketing, promoting, distributing, offering for sale and selling the Product, which may include clinical trials that are or are not mandated by a Regulatory Authority to support an application to obtain or maintain Regulatory Approvals for the Product.  When used as a verb, Commercialize means to engage in Commercialization.  

“Confidential Information” means any proprietary or confidential information of either party or any of its Affiliates (including all GPI Intellectual Property and all CBLI Intellectual Property) disclosed to the other party or any of its Affiliates pursuant to this Agreement.  Confidential Information shall not include information which: (a) is known to the receiving party or any of its Affiliates, as evidenced by the receiving party’s competent records, before receipt thereof under this Agreement; (b) is disclosed to the receiving party or any of its Affiliates by a third person who is under no obligation of confidentiality to the disclosing party hereunder with respect to such information and who otherwise has a right to make such disclosure; (c) is or becomes generally known in the public domain or available to the public through no fault of the receiving party; or (d) is independently developed or acquired by or on behalf of the receiving party or any of its Affiliates, as evidenced by the receiving party’s competent records, without access to such information.

“Control or Controlled” means, with respect to any intellectual property right, the possession (whether by ownership or license) by a party or an Affiliate thereof of the ability to grant to the other party access or a license as provided 

herein under such intellectual property right without violating the terms of any agreement or other arrangements between such party or its Affiliate and any Third Party existing before, or acquired after, the Effective Date.

“Cover” means (a) with respect to a granted patent, a Valid Claim thereof would be infringed in the absence of a right, authorization, consent or license with respect to such claimed subject matter, or (b) with respect to a patent application that has not been granted, a Valid Claim thereof, that if granted, would be infringed in the absence of a right, authorization, consent or license with respect to such claimed subject matter.

“Development” means the research and development of the Product, including all aspects of all activities that are necessary to enable the filing of an IND as well as those activities occurring from and after the filing of an IND, through and including obtaining Regulatory Approval of a BLA and any other Regulatory Approvals required for the Manufacture and Commercialization of the Product in a country.  Development includes performance of clinical trials that are required by a Regulatory Authority as a condition to obtaining or maintaining Regulatory Approvals for the Product.  When used as a verb, Develop means to engage in Development.

“FDA” means the United States Food and Drug Administration, or any successor thereto.  

“FD&C Act” means the United States Federal Food, Drug and Cosmetic Act of 1938 and applicable regulations promulgated thereunder, as amended from time to time.

“GPI Field” means the prevention or treatment of any disease, disorder or frailty in humans caused by aging or where the susceptibility of humans to contracting such disease, disorder, or frailty is generally recognized by the scientific and medical community to increase as a function of advanced age, without reference to the presence of other precursor diseases or disorders, including the prevention or treatment of any disease, disorder or frailty in humans that are “cancer survivors” (i.e., persons who are proclaimed to be “cancer free” at the time of treatment, but have been damaged by conventional cancer therapy. For the avoidance of doubt, it is understood and agreed that the GPI Field shall not include means the prevention or treatment of any disease or condition in humans that is caused by the recent exposure to ionizing radiation including treatment, mitigation and prevention of Acute Radiation Syndrome and concurrent radiation treatment of humans diagnosed with oncological conditions at the time of treatment.  

“GPI Intellectual Property” means Know-How, including Program Intellectual Property, other than Joint Program Intellectual Property, that is owned or Controlled by GPI or its Affiliates during the term of this Agreement and that is reasonably necessary or useful for or directly related to the Development, Manufacture or Commercialization of the Product.  The term GPI Intellectual Property does not include any Know-How, which is, as of the Effective Date or later becomes, generally available to the public, excluding GPI Confidential Information or Know-How owned or Controlled by GPI that is publicly disclosed by a Third Party without the consent of GPI, and Know-How included in GPI Patent Rights.  

“GPI Patent Rights” means those Patent Rights that Cover GPI Intellectual Property and are Controlled by GPI or its Affiliates at any time during the term of this Agreement.

“IND” means an investigational new drug application, as defined in the FD&C Act, filed with the FDA and necessary for beginning clinical trials of any product in humans or any equivalent application or other documentation filed with any Regulatory Authority of a country other than the U.S. required to begin clinical trials of any product in humans in that country.
 
“Joint Patent Rights” means those Patent Rights that Cover Joint Program Intellectual Property. 

“Joint Program Intellectual Property” means Program Intellectual Property that is owned jointly by the parties.

“Know-How” means discoveries, observations, inventions, know-how, knowledge, trade secrets, techniques, technology, skill, experience, specification, methodologies, modifications, improvements, works of authorship, designs and data (including pharmacological, biological, chemical, biochemical, toxicological, regulatory, analytical, quality control and stability data) (whether or not protectable under patent, copyright, trade secrecy or other laws).

“Licensed Technology”     means, collectively, the CBLI Patent Rights and CBLI Intellectual Property identified in Section 2.1(a).

“Manufacturing” means any and all activities related to the production of the Product. Manufacturing shall include: (a) technical and process development activities in connection with development of the manufacturing or production process for the Product and scale-up of such process; (b) manufacturing, production and packaging activities; (c) quality assurance activities; (d) testing activities, including stability testing and conformance testing; and (e) any and all other activities required to release manufacturing lots of the Product.  When used as a verb, Manufacture means to engage in Manufacturing.

“Major Market Countries” means the U.S., France, Germany, Italy, Japan, Spain, and the United Kingdom.  

“Patent Rights” means any and all (a) issued patents and (b) pending patent applications, including all provisional applications, substitutions, divisionals, continuations, continuations-in-part, renewals, and all letters of patent granted with respect to any of the foregoing, (c) patents of addition, restorations, reissues, extensions, supplementary protection certificates, registration or confirmation patents, patents resulting from post-grant proceedings, re-examinations; (d) inventor’s certificates; and (e) other forms of government issued rights substantially similar to any of foregoing, in each any country in the Territory.

“Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, limited liability partnership, unincorporated organization, government (or any agency or political subdivision thereof) or other legal entity or organization, other than CBLI or GPI.

“Product” means any product the Development, Manufacture, use or sale of which is covered by the CBLI Patent Rights or Joint Patent Rights or makes use of any CBLI Intellectual Property or Joint Program Intellectual Property.

“Provided Product” means the flagellin product known as entolimod (a.k.a. CBLB502), a roughly 35kDa protein. 

“Program Intellectual Property means, individually and collectively, all Know-How that is conceived, created, discovered, developed, generated, made or reduced to practice or tangible medium of expression, solely by or on behalf of a party either alone or jointly with the other party after the Effective Date and in the course of performing the Development, Manufacture or Commercialization of the  Product under this Agreement. 

“Program Patent Rights” means those Patent Rights that Cover Program Intellectual Property.

“Regulatory Approvals” means, for any country in the Territory, those authorizations by the appropriate Regulatory Authority(ies) required for the Manufacture and Commercialization of the Product in such country, including Price and Reimbursement Approval at a level acceptable to GPI.  

“Regulatory Authority” means any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in the Territory, with authority over the distribution, importation, exportation, Manufacture, production, use, storage, transport, clinical testing or sale of the Product, including the FDA.

“Regulatory Filing” means all applications, filings, dossiers and the like submitted to a Regulatory Authority in the Territory for the purpose of obtaining a Regulatory Approval from such Regulatory Authority.  

“Territory” means all the countries of the world.

“Third Party” means any Person other than the parties hereto or their respective Affiliates.

“Valid Claim” means a claim of a granted patent which has not been disclaimed, abandoned or surrendered or declared invalid or unenforceable in a final, unappealable or unappealed decision of a judicial or administrative court, government agency or patent office of appropriate jurisdiction.

1.2 Other Defined Terms.  The following terms shall have the meanings set forth in the section appearing opposite such term:
“AAA”                    Section 11.2(a)
“Acting Party”                 Section 6.2(d)
“Agreement”                Recitals
“Arbitration Request”            Section 11.2(a)
“Bankruptcy Code”            Section 2.1(f)
“CBLI”    Recitals 
“CBLI Development Activities”         Section 4.3
“CCF License”                Section 2.1(b)
“Effective Date”                Recitals 
“GPI”                    Recitals 
“GPI Development Activities”        Section 4.1
“Indemnified Party(ies)”            Section 9.2
“Indemnifying Party”            Section 9.2
“Joint Development Committee”        Section 3.1(a)
“Losses”                    Section 9.2
“Recipient”                Section 7.1(b)
“Representatives”                Section 12.5
“Responding Party”            Section 7.2(a)
“Submitting Party”            Section 7.2(a).

2.  LicenseS; Proprietary RightS

2.1 Grant of Licenses.  

(a) Subject to the terms of this Agreement, CBLI hereby grants to GPI, and GPI hereby accepts, (i) an exclusive, paid-up and royalty-free license, irrevocable, perpetual license, with the right to grant sublicenses in accordance with Section 2.1(b), under (A) the CBLI Patent Rights identified in Schedule A-2 and the CBLI Intellectual Property owned by CBLI that relates directly to such CBLI Patent Rights and (B) CBLI’s interests in Joint Program Intellectual Property and Joint Patent Rights to Develop, Manufacture, Commercialize, make, have made, use, have used, offer for sale, sell, have sold and import the Product in the GPI Field in the Territory.

(b) Subject to the terms of this Agreement, CBLI hereby grants to GPI, and GPI hereby accepts, an exclusive, fee-bearing and royalty-bearing sublicense, with the right to grant sublicenses in accordance with Section 2.1(c), under the CBLI Patent Rights identified in Schedule A-1 and the CBLI Intellectual Property Controlled by CBLI that relates directly to such CBLI Patent Rights to Develop, Manufacture, Commercialize, make, have made, use, have used, offer for sale, sell, have sold and import Product in the GPI Field in the Territory.  The fee and royalty obligations with respect to the CBLI Patent Rights identified in Schedule A-1 are specified in Sections 4.B, 4.C, 4.D and 4.E of the certain Exclusive License Agreement effective as of July 1, 2004 between CBLI and The Cleveland Clinic Foundation, as amended, a copy of which is attached to this Agreement as Exhibit 1 (the “CCF License”).  GPI acknowledges and agrees that this Agreement, as applicable to the CBLI Patent Rights identified in Schedule A-1 is subject to and GPI shall be bound by the rights and obligations due to The Cleveland Clinic Foundation contained in Sections 2.A, 2.G, 2.H, 4.B, 4.C, 4.D, 4.E, 6, 12, 13, 14 and 15 of the CCF License intended for the protection of The Cleveland Clinic Foundation. 

(c) The right of GPI to grant sublicenses under Section 2.1(a) or Section 2.1(d) is subject to the requirement that each such sublicense shall be in writing and shall include provisions (i) acknowledging that such sublicense is subject to the applicable license(s) granted hereunder, (ii) requiring each sublicensee to perform all applicable obligations of GPI hereunder in the applicable portion of the Territory (specifically including the obligation to make reports at least the same extent as required under this Agreement), and (iii) prohibiting further sublicensing by the sublicensee (except for a case of further sublicense by sublicensee to any Affiliate of the sublicensee), unless otherwise consented by CBLI.  

GPI shall at all times remain responsible for the performance of any of its sublicensees.  In the event that GPI (including a GPI Affiliate) grants a sublicense to a Third Party, GPI shall provide a copy of such sublicense it enters into to CBLI promptly following execution with redaction of GPI’s sensitive information, provided that such redactions shall not prevent CBLI from determining that the sublicense conforms to the requirements imposed under this Agreement for the protection of CBLI.  

(d) If, during the term of this Agreement, CBLI or one of its Affiliates has or obtains any patent or other proprietary right that could be asserted to prevent GPI from practicing the Licensed Technology to Develop, Manufacture, Commercialize, make, have made, use, have used, offer for sale, sell, have sold and import Product in the GPI Field in the Territory, as applicable, CBLI will grant and hereby agrees to grant GPI a non-exclusive, irrevocable, perpetual, paid-up and royalty-free license, with the right to sublicense, to such patent or other proprietary right solely within the GPI Field, as applicable.

(e) Subject to the terms of this Agreement, GPI hereby grants to CBLI, and CBLI hereby accepts, a non-exclusive, irrevocable, perpetual, paid-up and royalty-free license, with the right to grant sublicenses in accordance with Section 2.1(c) (with all references in Section 2.1(c) being deemed references to CBLI and all references in Section 2.1(c) to CBLI being deemed references to GPI) under the GPI Program Patent Rights and the GPI Program Intellectual Property and GPI’s interest in Joint Program Intellectual Property and Joint Patent Rights solely within the CBLI Field. 

(f) The licenses granted under this Section 2.1 shall be treated as licenses of rights to “intellectual property” (as defined in Section 101(56) of Title 11 of the United States Code, as amended (the “Bankruptcy Code”)) for purposes of Section 365(n) of the Bankruptcy Code.  The parties agree that the party holding the license from the other party may elect to retain and may fully exercise all of its rights and elections under the Bankruptcy Code, provided that it abides by the terms of this Agreement.

(g) Each party, as applicable, shall mark or have marked all containers or packages of any products that are the subject of the licenses granted under this Section 2.1 in accordance with the patent marking laws of the jurisdiction in which such products are Manufactured or Commercialized.

2.2 Proprietary Rights.  (a) This Agreement does not convey to CBLI any rights in any GPI Intellectual Property, GPI Patent Rights, GPI’s interest in Joint Program Intellectual Property or Joint Patent Rights or any other intellectual property or Patent Rights of GPI by implication, estoppel or otherwise except for the rights expressly granted Section 2.1(e).  Title to the GPI Intellectual Property, GPI Patent Rights, GPI’s interest in Joint Program Intellectual Property or Joint Patent Rights, and any other intellectual property or Patent Rights of GPI shall at all times remain vested in GPI.  This Agreement does not convey to GPI any rights in any CBLI Intellectual Property, CBLI Patent Rights, CBLI’s interest in Joint Program Intellectual Property or Joint Patent Rights or any other intellectual property or Patent Rights of CBLI by implication, estoppel or otherwise except for the rights expressly granted in Sections 2.1(a), 2.1(b), 2.1(c) and 2.1(d).  Title to the CBLI Intellectual Property, CBLI Patent Rights, CBLI’s interest in Joint Program Intellectual Property or Joint Patent Rights and any other intellectual property or Patent Rights of CBLI shall at all times remain vested in CBLI.  

(b) Inventorship of all Program Intellectual Property shall be determined in accordance with U.S. patent law (and other U.S. intellectual property law, if applicable).  Ownership of all Program Intellectual Property shall follow the inventorship, whether patentable or not.  If required, patent counsel mutually acceptable to the parties and selected by the Joint Development Committee shall determine inventorship of all Program Intellectual Property in accordance with U.S. patent law (and other U.S. intellectual property law, if applicable). 

(c) Neither party shall use Program Intellectual Property Controlled solely by the other party or Confidential Information nor intellectual property rights of the other party except as otherwise expressly permitted in this Agreement.  

3.  GOVERNANCE; information sharing

3.1 Joint Development Committee.  (a) Within thirty (30) days after the Effective Date, a Joint Development Committee (“Joint Development Committee”) shall be established with the responsibilities and authority set forth in this Section 3.1 and shall exists for the duration of this Agreement, unless otherwise agreed between the parties.  The Joint Development Committee shall consist of four (4) members, two (2) members to be appointed by each of CBLI and GPI.  Each party may, with notice to the other, substitute any of its members serving on the Joint Development Committee and may invite ad hoc non-voting members as desired.  The parties may also, by mutual agreement, increase or (subject to Section 3.1(d)) decrease the number of members serving on the Joint Development Committee; provided that the number of members representing each party remains equal.  GPI shall have the right to appoint one of its members to be the chairperson of the Joint Committee, whose term shall run for so long as the Joint Development Committee is in existence. 

(b)  The Joint Development Committee shall have the responsibility and authority to: (i) create mechanisms for interaction of the parties with respect to submission of Regulatory Filings; (ii) coordinate efforts of the parties to assure proper reporting of all adverse events; (iii) develop standard clinical and quality assurance operating procedures; (iv) determine the availability, timing, and amount of the Product to be supplied by CBLI to GPI for the conduct of the GPI Development activities, in accordance with Section 4, and procedures for forecasting and ordering same; and (v) perform such other functions as the parties may agree in writing.  The Joint Development Committee shall have no authority other than that expressly set forth in this Section 3.1.

(c)  The Joint Development Committee shall hold meetings as mutually agreed by the parties, but in no event less than annually unless GPI and CBLI mutually agree, no later than thirty (30) days in advance of any meeting following the initial meeting of the Joint Development Committee, that no new business has transpired that would require a meeting of the Joint Development Committee.  The meetings may be held by telephone or video conference.  Minutes of all meetings setting forth decisions of the Joint Development Committee shall be prepared by the party chairing such meeting and circulated to both parties within thirty (30) days after each meeting, and shall not become official until approved by both parties in writing; minutes shall be presented for approval as the first order of business at the subsequent Joint Development Committee meeting, or if it is necessary to approve the minutes prior to such subsequent meeting, then the parties shall approve the minutes within thirty (30) days of receipt thereof. 

(d)  The quorum for Joint Development Committee meetings shall be two (2) members, provided there are at least one (1) member from each of CBLI and GPI present.  The Joint Development Committee will render decisions by unanimous vote.  The members of the Joint Development Committee shall act in good faith to cooperate with one another and to reach agreement with respect to issues to be decided by the Joint Development Committee.  

(e)  Disagreements among the Joint Development Committee will be resolved via good-faith discussions; provided, that in the event of a disagreement that cannot be resolved within fifteen (15) days after the date on which the disagreement arose, the matter shall be resolved pursuant to Section 11.1 (first sentence); provided that if the dispute cannot be resolved pursuant to Section 11.1 (first sentence) within fifteen (15) days, then the party bearing the cost of performance of the obligation under this Agreement to which the dispute relates shall in good faith make the final determination with respect thereto, and such determination shall be final and binding and shall not be subject to Section 11.2.  Notwithstanding the foregoing, in all cases (i) CBLI shall make the final determination with respect to any matter relating to safety of the Product and (ii) GPI shall make the final determination with respect to the Development and Commercialization of the Product.  The Joint Development Committee shall not have any authority to resolve disputes with respect to the interpretation, breach, termination or invalidity of the Agreement or matters concerning the prosecution or enforcement of Program Intellectual Property, which shall be addressed using the procedures specified in Section 6.  

3.2 Operating Principles; Expenses.  The parties hereby acknowledge and agree that the deliberations and decision-making of the Joint Committee, and any subcommittee established by the Joint Development Committee shall be in accordance with the following operating principles: (a) decisions should be made in a prompt manner; and (b) the parties’ mutual objective is to maximize the clinical and commercial success of the Product in the Territory, consistent with sound and ethical business and scientific practices.  The parties shall each bear all expenses of their respective representatives on the Joint Development Committee and any subcommittee established under this Agreement.  The Joint Development Committee and any subcommittees established pursuant to this Agreement, will have only such 

powers as are specifically delegated to it in this Agreement, and will have no power to amend this Agreement or waive a party’s rights or obligations under this Agreement.

3.3 Information Disclosure.  Information that otherwise falls under the definition of Confidential Information contained in reports made pursuant to Section 3.1 or otherwise communicated between the parties will be subject to the confidentiality provisions of Section 6.1.  Each party shall have the right to use the Confidential Information disclosed by the other party without charge, but only to the extent necessary to enable each party to carry out their respective roles defined in this Agreement or otherwise in exercise of rights granted to it pursuant to this Agreement.

4.  Development; COMMERCIALIZATION; REGULATORY MATTERS

4.1 Development of the Product.  (a) GPI shall be solely responsible for carrying out, at its expense, all activities relating to Development of the Product in the GPI Field, other than those limited activities set forth in Section 4.3 as “CBLI Development Activities” (the “GPI Development Activities”).  GPI Development Activities shall include, without limitation, (i) preparing Regulatory Filings in the Territory for the Product in the GPI Field, (ii) establishing and interacting with all independent review boards related to the Development of the Product in the GPI Field in the Territory, as further provided in Section 4.6, (iii) developing as necessary new dosage forms for the Product for use in the GPI Field in the Territory, and (iv) conducting (or having conducted) all clinical trials for the Product in the GPI Field in the Territory.  

(b) GPI will provide CBLI, in a timely manner, with access to all clinical, safety and other data arising from the GPI Development Activities.  CBLI shall have the right to cross-reference all such data and information in any regulatory filing for the Product inside the CBLI Field in the Territory.  

4.2 Commercialization of the Product.  GPI shall be solely responsible for carrying out, at its expense, all activities relating to Commercialization of the Product in the GPI Field in the Territory.

4.3 CBLI Obligations.  As between GPI and CBLI, CBLI shall be responsible for (i) making available to GPI the CBLI Know-How as further described in Section 4.4, (ii) processing all safety reports and notifying GPI of any Product withdrawals or recalls, as further described in Section 4.8, and (iii) supplying Product to GPI for clinical trials, as further described in Section 5.1 (collectively, the “CBLI Development Activities”).

4.4 Transfer of CBLI Know-How.  Within thirty (30) days after the Effective Date, CBLI shall disclose and transfer to GPI all CBLI Know-How that CBLI reasonably believes is necessary to GPI in the performance of the GPI Development Activities in accordance with this Agreement.  Thereafter, CBLI will disclose and supply to GPI from time to time any material modifications or updates to the CBLI Know-How that CBLI reasonably believes are necessary to GPI in the performance of the GPI Development Activities.  In the event that GPI believes in good faith that CBLI has not disclosed to GPI CBLI Know-How that is necessary to GPI in the performance of the GPI Development Activities, GPI shall so notify CBLI in writing and CBLI shall not unreasonably withhold any such CBLI Know-How from disclosure to GPI.

4.5 Regulatory Filings in the GPI Field.  (a) GPI shall prepare all Regulatory Filings for the Product in the GPI Field in the Territory.  GPI shall ensure that all such Regulatory Filings conform strictly to all Applicable Laws.  In the preparation of such Regulatory Filings, GPI shall have the right to cross-reference data in the Regulatory Filings of CBLI or its Affiliates for the Provided Product in indications in the CBLI Field.  GPI shall ensure that all clinical and other data or information submitted by GPI to CBLI in connection with the GPI Development Activities is complete and accurate in all respects.

(b) GPI shall submit to CBLI each proposed Regulatory Filing prepared as provided under Section 4.5(a) for CBLI’s comments and review.  CBLI shall notify GPI in writing of any CBLI proposed modifications to such Regulatory Filing as soon as reasonably practicable after CBLI’s receipt of such filing, and GPI may implement such proposed modifications as soon as reasonably practicable; provided that GPI shall be required to implement any proposed modification that CBLI determines, in its reasonable judgment, based on specific and verifiable information that the 

comments are addressed to an unacceptable safety or regulatory risk associated with the Development or Commercialization of the Product in the GPI Field (including, without limitation, where a Regulatory Filing for the Product in the GPI Field in the Territory will adversely affect the then existing Regulatory Approval of the Provided Product or then pending Regulatory Filings for approval of the Product in an indication in the CBLI Field).  

(c) GPI will file in its own name, all Regulatory Filings finalized in accordance with Section 4.5(b) with the proper Regulatory Authority.  GPI shall provide to CBLI copies (which may be wholly or partly in electronic form) of all Regulatory Filings for the Product in the GPI Field submitted to Regulatory Authorities in the Territory within a reasonable time following the filing thereof.  In addition, the Joint Development Committee shall implement policies and procedures for providing to CBLI a copy of all correspondence or communications, other than Regulatory Filings, with Regulatory Authorities relating to the Product in the GPI Field in the Territory.

4.6 Interactions with Clinical or Regulatory Authorities. GPI shall establish and be responsible for interacting with all independent review boards related to the Development of the Product in the GPI Field in the Territory.  GPI shall also be responsible for and control all interactions with Regulatory Authorities with respect to the Product in the GPI Field.  GPI shall provide CBLI reasonable advance written notice of meetings and conference telephone calls with any Regulatory Authority related to the Product in the GPI Field in the Territory, and GPI shall use Commercially Reasonable Efforts to invite one senior regulatory executive of CBLI to attend meetings with such Regulatory Authorities as a silent observer, if and to the extent permitted by the relevant Regulatory Authority.

4.7 Ownership of Regulatory Approvals and Data.  As between the parties, GPI shall own and maintain all Regulatory Filings and all Regulatory Approvals that relate to the Product in the GPI Field in the Territory and shall own all clinical and other data arising in the Development, which data shall be deemed to be GPI Know-How.

4.8 Adverse Event Reporting.  (a) Each party shall promptly inform the other party of any adverse safety information or data affecting the Provided Product in the CBLI Field and in the Territory or the Product in the GPI Field in the Territory or either party’s obligations with respect to the safety of the Product under this Agreement.

(b) GPI shall have sole responsibility for all adverse event reporting, including any and all Serious Adverse Events (as defined at 21 C.F.R. 312.32(a)) in the U.S. and any aggregate and individual case safety reports with respect to the Product for all indications in the GPI Field in the Territory; and GPI shall maintain a unified worldwide adverse event database for the Product.  

(c)  CBLI shall maintain its existing adverse event database for the Provided Product, and will provide, upon request by GPI, any safety information in CBLI’s Control and reasonably required by GPI in connection with the Development and Commercialization of  the Product and all reasonable assistance in responding to safety queries related to the Product in the GPI Field and in assessing safety issues related to the Product in the GPI Field.  Details of safety reporting activities relating to the Product in the GPI Field in the Territory will be addressed in a pharmacovigilance agreement, which the parties shall enter into prior to the initiation of a clinical trial for the Product in the GPI Field in the Territory.

4.9 Standards of Conduct.  The parties shall use Commercially Reasonable Efforts to perform or shall use Commercially Reasonable Efforts to ensure that its Third Party contractors perform, all regulatory activities in good scientific manner and in compliance with Applicable Laws.  

5.  MANUFACTURE AND SUPPLY

5.1 Clinical Supply from CBLI.  Subject to the provisions of Section 4.1, CBLI shall be responsible for and shall use its Commercially Reasonable Efforts to supply or have supplied to GPI, at no charge, that number of units of the Provided Product necessary to complete those clinical trials of the Provided Product that are sponsored by GPI and necessary to file a BLA.  

5.2 Commercial Supply. (a) The parties will use Commercially Reasonable Efforts to determine whether GPI or CBLI should be responsible for manufacture of commercial supply of Provided Product.

(b) Until the parties make a determination regarding whether one of the parties will assume responsibility for manufacturing commercial supply of the Provided Product as set forth in Section 5.2(a), GPI shall purchase its supply of the Provided Product exclusively from a Third Party contract manufacturer acceptable to the Joint Development Committee in accordance with Section 3.  The parties shall coordinate their efforts to reduce the likelihood of supply interruptions at the time GPI or CBLI assumes responsibility for manufacture of commercial quantities of the Provided Product.

(c) If the parties determine that GPI shall be responsible for the Manufacture of commercial supply of Provided Product and/or drug substance for Provided Product, then GPI shall enter into a supply agreement(s) and a quality agreement(s) for the supply of drug substance and/or commercial supply of Provided Product.  If the parties determine that CBLI shall be responsible for the commercial manufacture of the Provided Product and/or drug substance for Provided Product, then at GPI’s request CBLI shall enter into a supply agreement(s) and a quality agreement(s) for the supply of drug substance or later stage clinical or commercial supply of the Provided Product.  The supply agreement(s) and quality agreement(s) shall be negotiated and managed by the parties and shall be on customary terms and conditions.  

6.  PATENT matters

6.1 Disclosure; Patent Prosecution.  (a)  Each of CBLI and GPI shall promptly and fully disclose to the other in writing reasonably detailed written reports describing any Know-How that might, under the applicable U.S. patent laws, be patentable and constitute Program Intellectual Property (whether or not Joint Program Intellectual Property), regardless of the place of invention of such Know-How.  With respect to the Licensed Technology that does not fall under the foregoing sentence, CBLI shall promptly disclose to GPI any Licensed Technology that arises during the term of the Agreement after such time as CBLI has taken steps deemed reasonably necessary by CBLI in its sole discretion to protect such Licensed Technology that constitutes CBLI Patent Rights, and with respect to GPI Intellectual Property that does not fall under the foregoing sentence, GPI shall promptly disclose to CBLI any GPI Intellectual Property and GPI Patent Rights after such time as GPI has taken steps deemed reasonably necessary by GPI in its sole discretion to protect such GPI Intellectual Property and GPI Patent Rights and only if such GPI Intellectual Property and GPI Patent Rights are the subject of the license set forth in Section 2.1(e) at such time.  Within forty-five (45) days following the date of disclosure regarding the existence of Program Intellectual Property, the parties shall mutually confirm the inventorship and ownership of the Program Intellectual Property in accordance with Section 2.2(b) and, in the case of the Joint Program Intellectual Property, the parties shall confer and mutually agree as to appropriate protection for such Joint Program Intellectual Property, including an application, preparation, prosecution and maintenance strategy.  Notwithstanding the provisions of this Section 6.1(a), neither party shall file any Patent Right relating to Program Intellectual Property without prior written mutual confirmation of inventorship and ownership in accordance with the immediate previous sentence nor any Joint Patent Right relating to Joint Program Intellectual Property without the other party’s prior written consent (which shall not be unreasonably withheld, delayed or conditioned).  

(b)  Subject to the last sentence of Section 6.1(a), CBLI shall (i) file, prosecute, and maintain those CBLI Patent Rights listed on Schedule A-1 and Schedule A-2, at CBLI’s sole expense, in each Major Market Country in the Territory and in any other countries within the Territory upon which CBLI and GPI agree.  CBLI shall promptly furnish or have furnished to GPI copies of all patents, patent applications, substantive patent office actions, and substantive responses received or filed in connection with such patents and patent applications.  In the case of patent applications and responses, copies will be furnished to GPI as soon as possible after CBLI’s receipt of the same; provided, that CBLI shall furnish such copies at least thirty (30) days before filing or mailing, as the case may be.  GPI may itself or through its attorney offer comments and suggestions with respect to the matters that are the subject of this Section 6.1(b) and CBLI shall consider such comments and suggestions.  If reasonably necessary, GPI shall cooperate, at CBLI’s expense, in the preparation, filing, prosecution and maintenance of any and all CBLI Patent Rights that are the subject of this Section 6.1(b).  CBLI shall promptly provide notice to GPI as to all matters that come to its attention that may affect the preparation, filing, prosecution or maintenance of any CBLI Patent Rights.  In the event that CBLI elects not to file for patent protection, or elects not to prosecute or maintain a patent or patent application under, the CBLI Patent Rights described in this Section 6.1(b) in a particular country(ies), CBLI shall notify GPI of such decision as soon as 

possible no later than sixty (60) days prior to the final deadline for any pending action or response that may be due with respect to such CBLI Patent Right with the applicable patent authority. In the event GPI provides written notice expressing its interest in prosecuting and maintaining such CBLI Patent Right, CBLI shall cooperate with GPI to permit GPI to file, prosecute, and maintain such CBLI Patent Rights, at GPI’s sole expense, subject to the provisions of Section 6.1(c).  

(c)  Subject to the last sentence of Section 6.1(a), GPI shall have the sole right, but not the obligation, to prepare, file, prosecute, and maintain each of the CBLI Patent Rights for which CBLI has the first right to file, prosecute and maintain and either elects not to prosecute or that are abandoned by CBLI, each as provided in Section 6.1(b) in the relevant country(ies).  With respect to Joint Patent Rights, GPI shall use outside patent counsel reasonably acceptable to both parties, and such outside counsel shall be responsible to both GPI and CBLI, and shall use reasonable efforts to solicit both GPI’s and CBLI’s advice on material prosecution matters related thereto.  Such outside patent counsel shall meet with GPI and CBLI patent counsel on a regular basis as needed to discuss strategy for the preparation, filing, prosecution and maintenance of the Joint Patent Rights.  GPI shall be solely responsible for costs associated with the GPI Patent Rights and CBLI Patent Rights for which GPI is responsible under this Section 6.1(c). CBLI shall pay the costs associated with the Joint Patent Rights (if any) relating to the CBLI Patent Rights listed on Schedule A-1 and Schedule A-2, in each Major Market Country in the Territory and in any other countries within the Territory upon which CBLI and GPI agree.  GPI shall promptly furnish or have furnished to CBLI copies of all patents, patent applications, substantive patent office actions, and substantive responses received or filed in connection with such applications for Joint Patent Rights and CBLI Patent Rights at least thirty (30) days before filing or mailing, as the case may be, and use reasonable efforts to solicit CBLI’s advice and review of Joint Patent Rights and CBLI Patent Rights and material prosecution matters related thereto in reasonable time prior to filing thereof, and GPI shall consider in good faith CBLI’s reasonable comments and suggestions related thereto; provided that nothing herein shall obligate GPI to adopt or follow such comments or suggestions.  If reasonably necessary, CBLI shall cooperate in the preparation, filing, prosecution and maintenance of any GPI Patent Rights (at GPI’s expense), CBLI Patent Rights (at CBLI’s expense) or Joint Patent Rights (at each of GPI’s and CBLI’s expense, allocated on a pro rata basis for Joint Patent Rights prosecuted in the Major Market Countries or at GPI’s expense for any other countries).
   
(d)  The parties will cooperate with one another in connection with any request for patent term extension under 35 U.S.C. §156 in the U.S., or analogous statutes or regulations in other jurisdictions in the Territory, for patents relating to the Products.  

6.2 Enforcement. (a)  If either party learns of any actual or threatened infringement or misappropriation or any attack on the validity or enforceability by a Third Party with respect to Joint Patent Rights, Joint Program Intellectual Property or Licensed Technology anywhere in the Territory, such party shall promptly notify the other party and shall provide such other party with available evidence of such events.

(b)  GPI shall have the first option to pursue any enforcement or defense of Licensed Technology, Joint Program Intellectual Property and Joint Patent Rights against infringement or misappropriation within the GPI Field, including defense against a declaratory judgment action alleging invalidity or non-infringement of any of the Licensed Technology, Joint Program Intellectual Property and Joint Patent Rights; provided, that GPI pays all costs and expenses related to the same, keeps CBLI reasonably informed of its progress and provides CBLI with copies of any substantive documents related to such proceedings and reasonable notice of all such proceedings.  GPI’s costs and expenses in prosecuting or defending such matters shall be subject to expense allocation (and reimbursement, if any) in accordance with Section 6.2(e).  GPI shall notify CBLI of its decision to exercise its right to enforce or defend Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights within the GPI Field as soon as possible, but not later than sixty (60) days following its discovery or receipt of notice of the alleged infringement or misappropriation. 

(c)  If (i) GPI notifies CBLI that it will not enforce any Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights in accordance with Section 6.2(b); (ii) GPI has exhausted all legal appeals with respect to causing the alleged infringement or misappropriation to cease or causing the person alleging the infringement or misappropriation to forebear, (iii) GPI fails to bring an infringement or misappropriation action within one hundred twenty (120) days following its discovery or receipt of notice of the alleged infringement or misappropriation or (iv) GPI is not diligently pursuing an infringement or misappropriation action or diligently defending the validity or 

enforceability of Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights at issue, then CBLI shall have the right to pursue the alleged infringer or party responsible for the alleged misappropriation or take control of any action initiated by, or being defended by, GPI at CBLI’s own expense.  Notwithstanding the foregoing, if GPI has not initiated an infringement or misappropriation action as described under (iii) above, or ceased to pursue such action, on the advice of outside patent counsel, then CBLI agrees not to (and shall cause, to the extent CBLI has the legally enforceable right to do so, its licensor(s) not to) initiate such an action without GPI’s prior consent not to be unreasonably withheld or delayed (with the determination of reasonableness taking into account the costs of such litigation, its likelihood for success, the potential damages or settlement recovery, and the potential for exposure to counterclaims and defenses against GPI with respect to any GPI Patent Rights with respect to the applicable the Product).  In any such case, GPI will, wherever possible under Applicable Law, substitute CBLI as party plaintiff for purposes of pursuing any alleged infringer or party responsible for the alleged misappropriation, or as defendant for defending any Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights.  In the event that CBLI fails to prevent its licensor(s) from bringing an infringement action as described above, then, at GPI’s request, CBLI shall request that such licensor execute an agreement confirming that the decision to enforce was made despite GPI’s objection.  CBLI’s licensor(s) shall not be responsible for reimbursing any litigation costs and shall have no right to obtain reimbursement for its litigation costs from GPI.  

(d)  Any recovery of damages or other sums recovered in a proceeding or action with regard to Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights handled by a party pursuant to Section 6.2(b) or Section 6.2(c) shall be applied first in satisfaction of any unreimbursed expenses and legal fees of the party bringing or defending the proceeding or action (the “Acting Party”) and next, if applicable, in satisfaction of the costs and expenses incurred by the other party in connection therewith, including reasonable attorneys’ fees involved in the prosecution and/or defense of any proceeding or action and, if after such reimbursement any funds shall remain from such damages or other sums recovered, the remaining recovery shall be retained one hundred percent (100%) by the Acting Party.  No settlement, consent judgment or other voluntary final disposition of any suit regarding Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights may be entered into without the consent of the other party, which consent shall not be unreasonably withheld.

(e)  In any infringement or misappropriation suit that either party may institute to enforce Licensed Technology, Joint Program Intellectual Property or Joint Patent Rights, or in any declaratory judgment action alleging invalidity, non‐infringement or non-misappropriation of any Licensed Technology brought against CBLI or GPI, the other party shall, at the request and expense of the party initiating or defending the suit or action, cooperate and assist in all reasonable respects, having its employees testify when requested and making available relevant records, papers, information, specimens and the like.  In addition, upon the reasonable request of the party instituting an action under Section 6.2(a) or Section 6.2(b), or if required by Applicable Law, the other party shall join such action and shall be represented using counsel of its own choice, at the requesting party’s expense; provided, that if GPI does not initiate an action hereunder on the advice of outside patent counsel, then CBLI may not require GPI to join such action but CBLI may have GPI join such action as an involuntary party, but GPI shall not be required to participate in such action.

(f)  Notwithstanding any provisions of this Section 6.2 to the contrary, each party shall promptly give written notice to the other of any filing of which it becomes aware, for regulatory approval of a generic form of the   Product if such filing becomes permissible in any country of the Territory during the term of this Agreement.  GPI shall then have the right to bring such an infringement action, in its discretion and at its own expense, in its own name and/or in the name of CBLI using the procedure set forth in Section 6.2(b).  If GPI does not wish to bring such action it shall notify CBLI promptly, in such a manner as to not prejudice such infringement action, and CBLI may bring such action using the procedure set forth in Section 6.2(c).  For the avoidance of doubt, if GPI does not initiate an infringement action hereunder on the advice of outside patent counsel, then CBLI agrees not to (and shall cause, to the extent CBLI has the legally enforceable right to do so, its licensor(s) not to) initiate such an action without GPI’s prior consent not to be unreasonably withheld or delayed.

6.3 Third Party Licenses; Defense of Infringement Actions. Each party shall bring to the attention of the other party, as soon as possible and in no event in a timeframe that would be prejudicial to the matter, all information regarding potential infringement or misappropriation of Third Party Patent Rights or Know-How as a result of the Development, Manufacture, or Commercialization of the Product in the GPI Field in the Territory.  The parties shall discuss such 

information and decide how to handle such matter.  This Section 6.3 shall not be interpreted as placing on either party a duty of inquiry regarding Third Party intellectual property rights.

7.  Confidentiality

7.1 Confidentiality.  (a)  During the term of this Agreement and for five (5) years thereafter, each party (i) shall maintain in confidence all Confidential Information of the other party; (ii) shall not use such Confidential Information for any purpose except as permitted by this Agreement; and (iii) shall not disclose such Confidential Information to anyone other than those of its Affiliates, sublicensees, prospective sublicensees, officers, directors, employees, consultants, agents or subcontractors who are bound by written obligations of nondisclosure and non-use no less stringent than those set forth in this Section 7 and to whom such disclosure is reasonably necessary or useful in connection with such party’s activities as contemplated in this Agreement.  Each party shall ensure that such party’s Affiliates, sublicensees, prospective sublicensees, officers, directors, employees, consultants, agents and subcontractors comply with these obligations.  Each party shall notify the other promptly on discovery of any unauthorized use or disclosure of the other’s Confidential Information, including, without limitation, the other’s trade secrets or proprietary information.  

(b) Notwithstanding the provisions of Section 7.1(a), a party receiving Confidential Information (the “Recipient”) may disclose Confidential Information to the extent such disclosure is (i) made in response to a valid and final order or subpoena of a court of competent jurisdiction or other governmental body of a country or any political subdivision thereof of competent jurisdiction; provided, that Recipient provides the other party with prior written notice of such disclosure (if practicable) in order to permit the other party to seek a protective order or other confidential treatment of such Confidential Information; and provided further that any Confidential Information so disclosed will be limited to that information that is legally required to be disclosed in such response to such court or governmental order or subpoena; (ii) otherwise required by Applicable Laws; provided, that Recipient provides the other party with prior written notice of such disclosure (if practicable) in order to permit the other party to seek a protective order or confidential treatment of such Confidential Information; and provided further that any Confidential Information so disclosed will be limited to that information that is legally required by Applicable Law to be disclosed; (iii) made by the Recipient to a Regulatory Authority, as required to conduct Development or obtain or maintain Regulatory Approvals; provided that reasonable efforts shall be used to ensure confidential treatment of such Confidential Information; (iv) made by the Recipient to a Third Party as may be necessary or useful in connection with the Development, Manufacturing or Commercialization related to the Product; provided the Third Party is bound by written confidentiality obligations no less protective that those set forth in this Agreement; (v) made by Recipient to a U.S. or foreign tax authority to the extent legally required by Applicable Laws to be disclosed; (vi) made by Recipient to its representatives or to third parties in connection with sublicensing or financing activities of the Recipient; provided that the Third Party is bound by written confidentiality obligations no less protective that those set forth in this Agreement; (vii) made by Recipient or any of its representatives in the filing or publication of Patent Rights relating to the Product to the extent such disclosure in the filing or publication of Patent Rights is reasonably necessary for support of the Patent Rights; (viii) made by Recipient to comply with Applicable Laws related to securities laws disclosure requirements or any disclosure requirements of any applicable stock market or securities exchange; or (ix) made by Recipient in compliance with Section 7.3.  

7.2 Publications.  (a)  Each party recognizes the mutual interest in obtaining valid patent protection and in protecting business interests and trade secret information. Consequently, except for disclosures permitted pursuant to Section 7.1(b), if a party wishes to make a publication containing (i) any CBLI Intellectual Property or subject of CBLI Patent Rights, or (ii) any GPI Intellectual Property or subject of GPI Patent Rights, the party disclosing or submitting such proposed publication (“Submitting Party”) shall send the other party (“Responding Party”) by expedited delivery a copy of the proposed publication to be submitted and shall allow the Responding Party a reasonable time period (but no more than sixty (60) days from the date of confirmed receipt) in which to determine whether the proposed publication contains subject matter for which patent protection should be sought (prior to publication of such proposed publication) for the purpose of protecting an invention, or whether the proposed publication contains Confidential Information of the Responding Party.  Following the expiration of applicable time period for review, the Submitting Party shall be 

free to submit such proposed publication for publication and publish or otherwise disclose to the public such scientific or clinical results, subject to the procedures set forth in Section 7.2(b). 

(b)  If the Responding Party believes that the subject matter of the proposed publication contains Confidential Information or a patentable invention of the Responding Party, then prior to the expiration of the applicable time period for review, the Responding Party shall notify the Submitting Party in writing of its determination that such proposed publication contains such information or subject matter for which patent protection should be sought.  On receipt of such written notice from the Responding Party, the Submitting Party shall delay public disclosure of such information or submission of the proposed publication for an additional period of ninety (90) days to permit preparation and filing of a patent application on the disclosed subject matter.  The Submitting Party shall thereafter be free to publish or disclose such information, except that the Submitting Party may not disclose any Confidential Information of the Responding Party in violation of Sections 7.1 and 7.2; provided that the parties shall use reasonable efforts to provide scientifically meaningful equivalent information that is not Confidential Information for use in such disclosure.  

7.3 Publicity.  No public announcement or disclosure may be made by any party with respect to the subject matter of this Agreement without the prior written consent of the other party; provided, that the provisions of this Section 7.3 will not prohibit (a) any disclosure required by any applicable legal requirement, including any legal requirement or listing standard of any exchange or quotation system on which the disclosing parties securities are listed or traded or to be listed or traded (in which case the disclosing party will provide the other party with the opportunity to review in advance the disclosure and to contest the same, including reasonable opportunity to seek a protective order or to seek confidential treatment of such disclosures under Rule 24b-2 of the Securities Exchange Act of 1934, as amended), (b) any disclosure made in connection with the enforcement of any right or remedy relating to this Agreement, (c) any disclosure made by CBLI or GPI to their respective employees, collaborators, licensors, licensees, contract research organizations, business partners, investors, potential investors, lenders and potential lenders provided the person receiving the disclosure has undertaken a confidentiality obligation to CBLI or GPI, as the case may be, substantially similar to the confidentiality obligations the parties have undertaken to each other under this Agreement, or (d) any disclosure made pursuant to a press release in a form mutually agreed to by the parties (or any other subsequent disclosure containing substantially similar information).  

8.  REPRESENTATIONS AND WARRANTIES.

8.1 Authorization; Enforceability.  Each of GPI and CBLI represent and warrant to the other that, as of the Effective Date: (a) it is a corporation duly organized and validly existing under the laws of its jurisdiction of organization and has all requisite power and authority to enter into this Agreement; (b) it is duly authorized by all requisite action to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and that the same do not conflict or cause a default with respect to such party’s obligations under any other agreement; (c)  it has duly executed and delivered this Agreement; (d) it is authorized to disclose any and all Confidential Information made available to the other party pursuant to this Agreement; and (e) it will comply at all times with the provisions of the Generic Drug Enforcement Act of 1992 and upon request will certify in writing to the other party that neither it, its employees nor any person providing services for such party under this Agreement has been debarred under the provisions of such act.

8.2 Additional Representations, Warranties and Covenants of CBLI.  CBLI further represents and warrants to GPI as follows:  

(a)  CBLI has no knowledge as of the Effective Date of any claims, judgments or settlements against CBLI or its licensor(s) pending, or threatened, that invalidate or seek to invalidate the CBLI Patent Rights.  CBLI has no knowledge of any pending litigation against CBLI or any Affiliate of CBLI or any licensor of CBLI that alleges that any of CBLI’s activities relating to the Provided Product have violated the intellectual property rights of any Third Party (nor has it received any written communication threatening such litigation).

(b)  CBLI has not previously assigned, transferred, conveyed or otherwise encumbered and will not assign, transfer, convey or otherwise encumber its right, title and interest in the Licensed Technology in a manner inconsistent with 

the terms hereof. There is and will be no agreement to which CBLI is a party and by which it is bound that would conflict with or be breached by CBLI granting GPI the licenses in Section 2.1.  

As used in this Section 8.2, “Knowledge” means to the actual knowledge of a director, an officer or employee of CBLI. 

8.3 Disclaimers.  (a) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTIONS 8.1-8.2, NeITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING ANY WARRANTY OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO. 

(b)  THE REPRESENTATIONS AND WARRANTIES OF EACH OF CBLI AND GPI EXTEND ONLY TO THE OTHER PARTY.  NEITHER PARTY WILL BE LIABLE FOR ANY CLAIM OR DEMAND AGAINST SUCH OTHER PARTY BY A THIRD PARTY, EXCEPT TO THE EXTENT PROVIDED IN SECTIONS 9.2-9.3.

9.  RISK ALLOCATION 

9.1 Limitation of Liability.  EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER SECTION 7.1 and except as otherwise provided in sections 9.2 and 9.3 WITH RESPECT TO third party claims, IN NO EVENT SHALL either party be liable TO THE OTHER for LOST PROFITS OR SAVINGS OR FOR ANY indirect, incidental, consequential, special, PUNITIVE or exemplary damages IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, however caused, under any theory of liability.

9.2 Third Party Claims (Excluding Infringement).  Subject to the provisions of Section 9.4, each of GPI and CBLI (each, in such capacity, the “Indemnifying Party”) will defend, indemnify and hold harmless the other party, its subsidiaries, parent corporations, Affiliates, officers, directors, partners, members, shareholders, employees, agents, and their successors and assigns (each, in such capacity, the “Indemnified Party”) from and against any claim, suit, demand, loss, damage, expense (including reasonable attorneys’ fees of the Indemnified Party(ies) and those that may be asserted by a Third Party) or liability including claims for death or personal injury (collectively, “Losses”) imposed upon the Indemnified Party(ies) by any Third Party arising from or related to: (a) any material breach of the Indemnifying Party’s representations and warranties (and covenants) under this Agreement; or (b) any negligence or intentional misconduct by the Indemnifying Party (or its employees, agents, representatives, Affiliates, licensees, sublicensees or distributors) in performing its obligations under this Agreement; or (c) in the case of GPI as Indemnifying Party, the labeling, packaging, package insert, other materials or promotional claims with respect to Product or the Manufacture, Commercialization, use or other disposition of such Product by GPI or by an Affiliate, licensee, sublicensee, distributor or agent of GPI.  The foregoing indemnification action shall not apply in the event and to the extent that such Losses arose as a result of any Indemnified Party’s negligence, intentional misconduct or breach of this Agreement.

9.3 Infringement Indemnification.  (a)  Subject to the provisions of Section 9.4, GPI shall defend, indemnify and hold harmless  the CBLI Indemnified Party(ies) from and against any Losses imposed upon them by any Third Party and arising from or related to a Third Party claim that the Development, Manufacture (if applicable) or Commercialization of any Product by GPI or by an Affiliate, licensee, sublicensee, distributor or agent of GPI; provided, however, that GPI shall not be required to indemnify, hold harmless or defend any CBLI Indemnified Party against any claim brought pursuant to the Section 9.3(a) to the extent (i) CBLI has an obligation to indemnify the GPI Indemnified Parties under Section 9.3(b) or (ii) related to any claim that the use of the Licensed Technology in accordance with this Agreement infringes any Patent Rights owned or controlled by any Third Party where such claim is based upon the use of the Licensed Technology alone, but not the use of the Licensed Technology with any other technology.

(b) Subject to the provisions of Section 9.4, CBLI shall defend, indemnify and hold harmless the GPI Indemnified Party(ies) from and against any Losses imposed upon them by any Third Party and arising from or related to a Third 

Party claim that use of the CBLI Intellectual Property or practice of the CBLI Patent Rights by CBLI in the CBLI Field violates or infringes the intellectual property rights of any Third Party.  CBLI shall have no obligation or liability to GPI under this Section 9.3(b) in the event and to the extent that the alleged infringement is covered by Section 9.3(a).

(c) For the avoidance of doubt, with respect to any infringement action brought against CBLI, GPI or both parties alleging infringement, that is not subject to this Section 9.3: (i) GPI shall have the final right to control such defense (including, settlement therefor) if GPI is the sole defendant, (ii) CBLI shall have the final right to control such defense (including settlement) therefor if CBLI is the sole defendant and (iii) the parties shall jointly control such defense (including settlement therefor) if the parties are joint defendants and each party shall bear its own cost incurred, including its internal cost.    

9.4 Procedure.  To receive the benefit of indemnification under Sections 9.2 or 9.3, the Indemnified Party must (a) promptly notify the Indemnifying Party of a claim or suit; provided, that failure to give such notice shall not relieve Indemnifying Party of its indemnification obligations except where, and solely to the extent that, such failure actually and materially prejudices the rights of Indemnifying Party; (b) provide reasonable cooperation to the Indemnifying Party (and its insurer), as reasonably requested, at Indemnifying Party’s cost and expense; and (c) tender to the Indemnifying Party (and its insurer) full authority to defend or settle the claim or suit; provided that no settlement requiring any admission by the Indemnified Party or that imposes any obligation on the Indemnified Party shall be made without the Indemnified Party’s consent.  Neither party has any obligation to indemnify the other party in connection with any settlement made without the Indemnifying Party’s written consent.  The Indemnified Party has the right to participate at its own expense in the claim or suit and in selecting counsel therefor.

9.5 Insurance.  Not later than thirty (30) days before the date on which GPI or any Affiliate or sublicensee of GPI, shall, on a commercial basis, make, use, or sell Product in the GPI Field, or CBLI or any Affiliate or sublicensee of CBLI shall, on a commercial basis, make, use, or sell Product in the CBLI Field, as applicable, and at all times thereafter until the expiration of all applicable statutes of limitation pertaining to any such manufacture, marketing, possession, use, sale of other disposition of Product in the GPI Field or the CBLI Field, as applicable, GPI will, at its expense, and CBLI will, at its expense, obtain and maintain in full force and effect, comprehensive general liability insurance, including product liability insurance and clinical trial insurance with a minimum coverage of $5,000,000 per occurrence and $5,000,000 annual aggregate.  Such insurance shall name the other party as an additional insured and shall provide for at least thirty (30) days’ notice to the other party of any cancellation or termination.  Notwithstanding the foregoing, with the other party’s prior written consent, a party may elect to self-insure with respect to any insurance coverage it is required to obtain hereunder as part of a comprehensive self-insurance program adopted by GPI.

10.  TERM AND TERMINATION

10.1 Term.  This Agreement shall take effect as of the Effective Date and shall remain in effect until the expiration of the last to expire Valid Claim of the CBLI Patent Rights, unless sooner terminated in accordance with Section 10.2. 

10.2 Termination.  The parties may terminate this Agreement, at any time upon mutual written agreement of the parties.

10.3 Effect of Termination. (a)  In the event the license granted to GPI under Section 2.1(a), Section 2.1(b), or Section 2.1(d) terminates for any reason before expiration of the term set forth by Section 10.1 above, each of GPI’s Third Party sublicensees at such time shall continue to have the rights and licenses set forth in their sublicense agreements; provided, that such sublicensee agrees in writing that (i) CBLI is entitled to enforce all relevant provisions directly against such sublicense and (ii) CBLI shall not assume, and shall not be responsible to such sublicensee for, any representations, warranties or obligations of GPI to such sublicensee, other than to permit such sublicensee to exercise any rights to Product that are sublicensed under such sublicense agreement; and provided further, that GPI shall have no liability to CBLI for any action or inaction of the sublicensees under any continuing license to the sublicensee.  

(b)  Nothing herein shall be construed to release either party of any obligation which matured prior to the effective date of any termination.  Either party’s liability for any uncontested charges, payments or expenses due to the other party that accrued prior to the termination date shall not be extinguished by termination, and such amounts (if not otherwise due on an earlier date) shall be immediately due and payable on the termination date.
  
10.4 Survival.  Sections 1, 2.1(f), 2.2, 4.7, 7, 8, 9, 10.3, 11, 12.1-12.3, and 12.6-12.12 shall survive any termination or expiration of this Agreement.  

10.5 Specific Performance.  The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof or if a party violated the terms of the licenses specified in Section 2.1, and that the parties shall be entitled to specific performance of the terms of this Agreement, in addition to any other remedy to which they are entitled at law or in equity. Each party hereto (a) agrees that it shall not oppose the granting of such specific performance or relief and (b) hereby irrevocably waives any requirement for the security or posting of any bond in connection with such relief.

11.  Dispute resolution

11.1 Issue Resolution.  Unless otherwise set forth in this Agreement, in the event of a dispute arising out of, in connection with or under this Agreement between the parties, including disputes that cannot be resolved by the Joint Committee, the parties shall refer such dispute to the Parties’ Executive Officers, and such Executive Officers (or their designee) shall attempt in good faith to resolve such dispute.  If the parties are unable to resolve a given dispute pursuant to this Section 11.1 within sixty (60) days of referring such dispute to the Executive Officers, such dispute shall be resolved by binding arbitration in the manner described in Section 11.2.

11.2 Arbitration.  (a)  If a party intends to begin an arbitration to resolve a dispute arising under this Agreement after the provisions of Section 11.1 have been exhausted, such party shall provide written notice (the “Arbitration Request”) to the other party of such intention and the issues for resolution.  From the date of the Arbitration Request and until such time as the dispute has become finally settled, the running of the time periods as to which a party must cure a breach of this Agreement becomes suspended as to the subject matter of the dispute.  Unless the parties otherwise agree in writing, during the period of time that any arbitration proceeding is pending under this Agreement, the parties shall continue to comply with all those terms and provisions of this Agreement that are not the subject of the pending arbitration proceeding.  The arbitration proceeding shall be conducted in accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the American Arbitration Association (the “AAA”) and otherwise as set forth in this Section 11.2.

(b)  Within ten (10) Business Days after the receipt of the Arbitration Request, the other party may, by written notice, add additional issues for resolution; provided, that such issues have been subject to Section 11.1 and relate directly to the matter that is the subject of the applicable Arbitration Request.

(c)  The arbitration shall be conducted by one (1) arbitrator selected in accordance with the AAA Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes as modified below, unless the matter in dispute has a value of at least $50,000,000 and either party wishes to have the arbitration conducted by a panel of three (3) arbitrators.  The arbitrator(s) shall be experienced in the subject matter of the Arbitration Request as it applies to the biotechnology or pharmaceutical business.  The parties shall cooperate to attempt to select the arbitrator(s) by agreement within twenty (20) days of the initiation of arbitration.  If agreement cannot be reached within such twenty (20) days, then that AAA will submit a list of twenty (20) qualified arbitrators from which each party shall strike unacceptable entries; provided that each party shall not strike more than thirty-five percent (35%) of the names without cause and rank the remaining names.  The AAA shall appoint the arbitrator(s) with the highest combined ranking(s).  If these procedures fail to result in selection of the required number of arbitrators, the AAA shall appoint the arbitrator(s), allowing each side challenges for cause. The arbitration shall be held in New York, New York and all proceedings and communications shall be conducted in English.  The parties each use their best efforts to have the arbitration hearing held as soon as practicable and in any event within sixty (60) days after the selection of the arbitrator(s).  At least five (5) Business Days prior to the arbitration hearing, each party shall submit to the other party and the arbitrator(s) a copy of all exhibits 

on which such party intends to rely at the hearing, a pre-hearing brief (up to 20 pages), and a proposed ruling (up to 5 pages).  The proposed ruling shall be limited to proposed rulings and remedies on each issue and shall contain no argument on or analysis of the facts or issues.  Within five (5) Business Days after close of the hearing, each party may submit a post-hearing brief (up to 5 pages) to the arbitrator(s).

(d)  Either party may apply first to the arbitrators for interim injunctive relief until the arbitration decision is rendered or the arbitration matter is otherwise resolved; provided, that if such party determines that such injunctive relief cannot be awarded in a timeframe adequate to protect such party’s interests, then a party may, without waiving any right or remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that party pending resolution of the arbitration matter pursuant to this Section 11.2.  The arbitrators shall have no authority to award punitive or any other type of damages not measured by a party’s compensatory damages.  The parties further agree that the decision of the arbitrators shall be the sole, exclusive and binding remedy between them regarding determination of arbitration matters presented.
 
(e) The parties hereby agree that any disputed performance or suspended performance pending the resolution of an arbitration matter that the arbitrators determine to be required to be performed by a party must be completed within a reasonable time period following the final decision of the arbitrators.

(f)  Each party shall bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrators; provided, however, that the arbitrators shall be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges and travel expenses), and/or the fees and costs of the arbitrators.

(g)  Except to the extent necessary to confirm an award or decision or as may be required by Applicable Laws, neither a party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both parties.  

(h) The parties agree that, in the event of an arbitration matter involving the alleged breach of this Agreement, neither party may terminate this Agreement until resolution of such matter pursuant to this Section 11.2, and any time period for cure will only commence after such resolution.
  
(i) By agreeing to this binding arbitration provision, the parties understand that they are waiving certain rights and protections which may otherwise be available if a dispute between the parties were determined by litigation in court, including the right to seek or obtain certain types of damages precluded by this provision, the right to a jury trial, certain rights of appeal, and a right to invoke formal rules of procedure and evidence.

12.  General Provisions

12.1 Governing Law.  This Agreement shall be governed and construed in accordance with the internal, substantive laws of the State of New York, to the exclusion of any choice or conflict of laws rule or provision that would result in the application of the substantive law of any other jurisdiction.  Notwithstanding the foregoing, with respect to any dispute relating to the determination of scope, validity or enforceability of any Patent Rights, the parties consent to the exclusive jurisdiction of the federal courts of the United States and the Applicable Laws of the United States which cause that Patent Right to come into being.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to the transactions contemplated by this Agreement.  

12.2 Amendment and Waiver.  No provision of or right under this Agreement shall be deemed to have been waived by any act or acquiescence on the part of either party, its agents or employees, but only by an instrument in writing signed by an authorized officer of each party.  No waiver by either party of any breach of this Agreement by the other party shall be effective as to any other breach, whether of the same or any other term or condition and whether occurring before or after the date of such waiver.

12.3 Independent Contractors.  Each party represents that it is acting on its own behalf as an independent contractor and is not acting as an agent for or on behalf of any Third Party. This Agreement and the relations hereby established by and between GPI and CBLI do not constitute a partnership, joint venture, franchise, agency or contract of employment.  Neither party is granted, and neither party shall exercise, the right or authority to assume or create any obligation or responsibility on behalf of or in the name of the other party or its Affiliates.  Each party shall be solely responsible for compensating all its personnel and for payment of all related FICA, workers’ compensation, unemployment and withholding taxes.  Neither party shall provide the other party’s personnel with any benefits, including but not limited to compensation for insurance premiums, paid sick leave or retirement benefits.

12.4 Assignment.  Subject to Section 12.6, neither party may assign this Agreement or any of its rights and obligations under this Agreement without the prior written consent of the other party; provided, that either party may assign this Agreement to (a) any Person to which such party transfers all or substantially all of its assets to which this Agreement relates or with which such party is consolidated or merged; (b) any Person that owns a majority of the voting stock of such party; or (c) an Affiliate of the assigning party; provided, further, that in each instance the assignee expressly assumes all obligations imposed on the assigning party by this Agreement in writing and the other party is notified in advance of such assignment. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

12.5 Compliance of Anti-bribery.  In performing this Agreement, each party and its director, officer, employee, consultant, contractor and agents of each party or Affiliates (collectively, “Representatives”) (a) shall not offer to make, make, promise, authorize or accept any payment or giving anything of value, including, but not limited to, bribes, either directly or indirectly to any public official, Regulatory Authority or anyone else for the purpose of influencing, inducing or rewarding any act, omission or decision in order to secure an improper advantage, or obtain or retain business and (b) shall comply with all applicable anti-corruption and anti-bribery laws and regulations.  Each party shall notify the other immediately upon becoming aware of any breach of its obligations under this Section 12.5.

12.6 Application to Affiliates.  It is understood and agreed that for purposes of the definitions of CBLI Intellectual Property, CBLI Patent Rights, GPI Intellectual Property and GPI Patent Rights and for purposes of Section 2.1(c), the term “Affiliate” shall not be construed to cover any Third Party that becomes an Affiliate of CBLI or GPI after the Effective Date as a result of a transaction in which (i) such Third Party directly or indirectly acquires all or substantially all of the stock or assets of CBLI or GPI or (ii) CBLI or GPI is consolidated or merged into such third party or any of its affiliates; if the result of a transaction described in clause (i) or (ii) is that any “person” or “group” (within the meaning of Section 12.(d) or 14(d) of the Securities Exchange Act of 1934, as amended) acquires, directly or  indirectly, the beneficial ownership, of a majority of the voting power of CBLI or GPI and specifically excluding any person or group that is controlled directly or indirectly by CBLI or GPI or its present officers or directors; provided further, that with respect to any such third party, the non-applicability of Section 2.1(c) shall only take effect in the event and to the extent that those provisions would require such acquiring Third Party to cease activities that were being actively pursued prior to the date it becomes an Affiliate of CBLI.  It is further understood and agreed that any Third Party that becomes an Affiliate of CBLI in a transaction in which CBLI acquires control of such Third Party shall be deemed an Affiliate for purposes of Section 2.1(c).

12.7 Notices.  Any notice to be given under this Agreement must be in writing and delivered either in person, or by overnight courier by FedEx or DHL, to the party to be notified at its address given below, or at any address such party may designate by prior written notice to the other in accordance with this Section 12.7.  Notice shall be deemed sufficiently given for all purposes upon the earliest of: (i) the date of delivery if delivered in person; or (ii) if delivered by overnight courier the next Business Day. 

		
	If to GPI: 
	Genome Protection, Inc.    

73 High Street
Buffalo, New York 14203
Attention:  Chairman, Board of Directors

		
	If to CBLI:
	Cleveland BioLabs, Inc.

73 High Street

Buffalo, New York 14203
Attention: Chief Executive Officer

12.8 Severability.  In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision hereof.  The parties agree that they will negotiate in good faith or will permit a court to replace any provision hereof so held invalid, illegal or unenforceable with a valid provision which is as similar as possible in substance to the invalid, illegal or unenforceable provision.

12.9 Captions.  Captions of the sections and subsections of this Agreement are for reference purposes only and do not constitute terms or conditions of this Agreement and shall not limit or affect the meaning or construction of the terms and conditions hereof.

12.10 Word Meanings.  Words such as herein, hereinafter, hereof and hereunder refer to this Agreement as a whole and not merely to a section or paragraph in which such words appear, unless the context otherwise requires.  The singular shall include the plural, and each masculine, feminine and neuter reference shall include and refer also to the others, unless the context otherwise requires, the word “or” is used in the inclusive sense (and/or) and the word “including” is used without limitation and means “including without limitation”.

12.11 Entire Agreement.  The terms and provisions contained in this Agreement (including the Attachments) constitute the entire understanding of the parties with respect to the transactions and matters contemplated hereby and supersede all previous communications, representations, agreements and understandings relating to the subject matter hereof, including the Confidentiality Agreement dated May 24, 2018.  No representations, inducements, promises or agreements, whether oral or otherwise, between the parties not contained in this Agreement shall be of any force or effect.  No agreement or understanding extending this Agreement or varying its terms (including any inconsistent terms in any purchase order, acknowledgment or similar form) shall be binding upon either party unless it is in a writing specifically referring to this Agreement and signed by a duly authorized representative of the applicable party. 

12.12 Rules of Construction.  The parties agree that they have participated equally in the formation of this Agreement and that the language and terms of this Agreement shall not be construed against either party by reason of the extent to which such party or its professional advisors participated in the preparation of this Agreement.

12.13 Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

12.14 Further Assurances.  Each party covenants and agrees that, subsequent to the execution and delivery of this Agreement and without any additional consideration, it will execute and deliver any further legal instruments and perform any acts which are or may become reasonably necessary to effectuate the purposes of this Agreement. 

IN WITNESS WHEREOF the parties have caused this Agreement to be executed on their behalf by their duly authorized representatives as of the Effective Date.

CLEVELAND BIOLABS, INC.                    GENOME PROTECTION, INC.

By: /s/ YAKOV KOGAN                            By: /s/ YAKOV KOGAN
Name: Yakov N. Kogan                            Name:  Yakov N. Kogan
		
	Title: Chief Executive Officer
	Title:  Director 

Schedule A-1    Entolimod Composition Patents
Schedule A-2    Entolimod Oncology Patents
Exhibit 1        CCF License

Schedule A-1

Entolimod Composition Patents

	
					
	Title
	Jurisdiction
	Application Details
	Patent Details
	Status

	Flagellin related polypeptides and uses thereof
	Europe
	EP 05855104.5
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	EP 1838340
04-04-2018
	PATENTED

	Flagellin related polypeptides and uses thereof
	France
	EP 05855104.5
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	EP 1838340
04-04-2018
	PATENTED

	Flagellin related polypeptides and uses thereof
	Germany
	EP 05855104.5
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	EP 1838340
04-04-2018
	PATENTED

	Flagellin related polypeptides and uses thereof
	Great Britain
	EP 05855104.5
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	EP 1838340
04-04-2018
	PATENTED

	Flagellin related polypeptides and uses thereof
	Switzerland
	EP 05855104.5
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	EP 1838340
04-04-2018
	PATENTED

	Flagellin related polypeptides and uses thereof
	Israel
	IL 184140
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	IL 184140
12-01-2015
	PATENTED

	Flagellin related polypeptides and uses thereof
	Israel
	IL 227910
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	IL 227910
12-01-2015
	PATENTED

	Flagellin related polypeptides and uses thereof
	Japan
	JP 2007-548451
Filing Date: 12-22-2005
Priority Date: 12-22-2004
	JP 5285278
09-11-2013
	PATENTED

	Flagellin related polypeptides and uses thereof
	USA
	US 11/722,682
Filing Date: 05-02-2008
Priority Date: 12-22-2004
	US 8,007,812
08-30-2011
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 13/110,704
Filing Date: 05-18-2011
Priority Date: 12-22-2004
	US 8,932,609
01-13-2015
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 13/110,720
Filing Date: 05-18-2011
Priority Date: 12-22-2004
	US 8,287,882
10-16-2012
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 14/284,354
Filing Date: 05-21-2014
Priority Date: 12-22-2004
	US 8,871,215
10-28-2014
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 14/559,669
Filing Date: 12-03-2014
Priority Date: 12-22-2004
	US 9,139,623
09-22-2015
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 14/828,111
Filing Date: 08-17-2015
Priority Date: 12-22-2004
	US 9,228,000
01-05-2016
	PATENTED

	
					
	Flagellin related polypeptides and uses thereof
	US
	US 14/949,492
Filing Date: 11-23-2015
Priority Date: 12-22-2004
	US 9,457,061
10-04-2016
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 15/254,695
Filing Date: 09-01-2016
Priority Date: 12-22-2004
	9,827,289
11-28-2017
	PATENTED

	Flagellin related polypeptides and uses thereof
	US
	US 15/794,804
Filing Date: 10-26-2017
Priority Date: 12-22-2004
	N/A
	PENDING

Schedule A-2

Entolimod Oncology Patents

	
					
	Title
	Jurisdiction
	Application Details
	Patent Details
	Status

	Use of toll-like receptor agonist for treating cancer
	Argentina
	AR P120102493
Filing Date: 07-10-2012
Priority Date: 01-10-2011
	N/A
	PENDING

	Use of toll-like receptor agonist for treating cancer
	Israel
	IL 227308
Filing Date: 01-10-2012
Priority Date: 01-10-2011
	IL 227308
03-01-2018
	PATENTED

	Use of toll-like receptor agonist for treating cancer
	India
	IN 1272/MUMNP/2013
Filing Date: 01-10-2012
Priority Date: 01-10-2011
	N/A
	PENDING

	Use of toll-like receptor agonist for treating cancer
	Japan
	JP 2013-548628
Filing Date: 01-10-2012
Priority Date: 01-10-2011
	6041444
11-18-2016
	PATENTED

	Use of toll-like receptor agonist for treating cancer
	Mexico
	MX/a/2013/007967
Filing Date: 01-10-2012
Priority Date: 01-10-2011
	N/A
	PENDING

	Use of toll-like receptor agonist for treating cancer
	New Zealand
	NZ 612615
Filing Date: 01-10-2012
Priority Date: 01-10-2011
	NZ 612615
12-01-2015
	PATENTED

	Use of toll-like receptor agonist for treating cancer
	USA
	US 13/979,104
Filing Date: 07-10-2013
Priority Date: 01-10-2011
	9,376,473
Jun-28-2016
	PATENTED

	Use of toll-like receptor agonist for treating cancer
	USA
	US 15/631,427
Filing Date: 23-Jun-2017
Priority Date: 01-10-2011
	N/A
	ALLOWED

Exhibit 1

CCF License

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