FIRST AMENDMENT TO RIGHTS AGREEMENT
FIRST AMENDMENT, dated as of February 9, 1999 ("First Amendment"), to
Amended and Restated Rights Agreement dated as of May 16, 1997 (the "Rights
Agreement"), between Sunrise Medical, Inc. (the "Company") and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent"). Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Rights Agreement.
WHEREAS, the Company and the Rights Agent previously entered into the
Rights Agreement; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company
and the Rights Agent may from time to time supplement or amend any provision of
the Rights Agreement in accordance with the terms of such Section 26.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
agreements set forth in this Amendment, the parties hereby amend the Rights
Agreement as follows:
1. The first proviso of Section 1(c)(ii) of the Rights Agreement
is hereby amended to (a) delete the words "prior to such Person's becoming an
Acquiring Person" and substitute therefor the words "has approved such agreement
and determined that such Person shall not be deemed to be the Beneficial Owner
of such securities within the meaning of this SECTION 1(C)" and (b) delete the
words "such agreement has been approved by" and substitute therefor the words
"prior to such Person's becoming an Acquiring Person".
2. Section 1(k) of the Rights Agreement is hereby amended to
delete the words "Interested Director" and "23(c)".
3. The second sentence of Section 3(a) of the Rights Agreement is
hereby amended and restated in its entirety as follows:
"The preceding sentence notwithstanding, prior to the occurrence of a
Distribution Date specified as a result of an event described in
clause (ii) (or such later Distribution Date as the Board of Directors
of the Company may select pursuant to this sentence), the Board of
Directors of the Company may postpone, one or more times, the
Distribution Date which would occur as a result of an event described
in clause (ii) beyond the date set forth in clause (ii) of the
preceding sentence."
4. Section 11(a)(ii) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"Subject to Section 27 of this Agreement, in the event that a Trigger
Event occurs, then, promptly following the first occurrence of a
Trigger Event, proper provision shall be made so that each holder of a
Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof in
accordance with the terms of this Rights Agreement, such number of
Common Shares as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the then-number of Common Shares for which
a Right is then exercisable and (y) dividing that product by 50% of the
current per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of the occurrence of, or the date of the first
public announcement of, one of the events listed above in this Section
11(a)(ii) (the "Adjustment Shares"); PROVIDED, HOWEVER, that if the
transaction that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). Notwithstanding the foregoing,
upon the occurrence of a Trigger Event, any Rights that are or were
acquired or beneficially owned by an Acquiring Person or any Associate
or Affiliate of the Acquiring Person shall become null and void and
any holder (whether or not such holder is an Acquiring Person or an
Associate or Affiliate of an Acquiring Person) of such Rights shall
thereafter have no right to exercise such Rights under any provision
of this Rights Agreement or otherwise. Any Right Certificate issued
pursuant to Section 3 or 22 that represents Rights beneficially owned
by: (1) an Acquiring Person or any Associate or Affiliate thereof, (2)
a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (3) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or
effect avoidance of this Section 11(a)(ii) and any Right Certificate
issued pursuant to Section 6, 7(d) or 22 or this Section 11 upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following
legend (PROVIDED, HOWEVER, that the Rights Agent shall not be
responsible for affixing such legend unless the Company has notified
the Rights Agent in writing thereof):
The Rights represented by this Right Certificate are
held or have been held by a Person who was an
Acquiring Person or an Affiliate or an Associate of
an Acquiring Person or a nominee thereof. This Right
Certificate and the Rights represented hereby have
become null and void as specified in Section
11(a)(ii) of the Rights Agreement.
The Company shall use all reasonable efforts to insure that the
provisions of this Section 11(a)(ii) 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 any
Acquiring Person or its Affiliates, Associates or transferees
hereunder."
5. The last sentence of Section 11(d) of the Rights Agreement is
hereby amended to add the words "or if on any such date the Common Shares are
not so quoted and no such market maker is making a market in the Common Shares,"
after the word "traded" and before the word "current".
6. Section 11(f) of the Rights agreement is hereby amended to (a)
delete the words "11(a) through (c), inclusive" and substitute therefor the
words "11(b), 11(c), 11(e), 11(h), 11(i) and 11(m)"; and (b) delete the words
"and 13" and substitute therefor the words ", 13 and 14".
7. Section 13(b) of the Rights Agreement is hereby amended to (a)
delete the words "In the event" and substitute therefor the words "Upon the
consummation", and to (b) add the words "of the type described in clause (A),
(B) or (C) of SECTION 13(A)" after the word "transaction" and before the word
"involving".
8. Section 20(c) of the Rights Agreement is hereby amended to add
a second sentence at the end thereof, which reads in its entirety as follows:
"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."
9. Section 22 of the Rights Agreement is hereby amended to add a
second sentence at the end thereof, which reads in its entirety as follows:
"In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the Expiration Date, the
Company shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan
or arrangement, granted or awarded, or upon exercise, conversion or
exchange of securities issued by the Company, in each case
existing prior to the Distribution Date, 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."
10. Section 23(a) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"(a) The Board of Directors of the Company may, at its option, at
any time prior to a Trigger Event, redeem all but not less than all of
the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"REDEMPTION PRICE"), and the Company may, at its option, pay the
Redemption Price in Common Shares (based on the "current per share
market price," determined pursuant to Section 11(d), of the Common
Shares at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of Directors. The
redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and subject to such conditions
as the Board of Directors in its sole discretion may establish."
11. Section 23(c) of the Rights Agreement is hereby deleted in its
entirety.
12. Section 24 of the Rights Agreement is hereby amended to add the
words "at any time after the earlier of the Shares Acquisition Date and the
Distribution Date" after the word "propose" and before subheading "(a)".
13. The first sentence of Section 26 of the Rights Agreement is
hereby amended by deleting clause (ii) thereof in its entirety, renumbering
clause (iii) as (ii), and adding the word "or" immediately prior to the new
clause (ii).
14. Section 34 of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"Section 34. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and
powers specifically granted to the Board of Directors of the Company or to
the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes
of clause (y) below, all omissions with respect to the foregoing) that are
done or made by the Board of Directors of the Company in good faith shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all
other parties, and (y) not subject the Board of Directors to any liability
to the holders of the Rights. The Rights Agent shall always be entitled to
assume that the Board of the Company acted in good faith and shall be fully
protected and shall incur no liability in reliance on such assumption."
15. The fourth paragraph of Exhibit A to the Rights Plan ("Form of
Right Certificate) is hereby amended and restated in its entirety as follows:
"Subject to the provisions of the Agreement, the Board of
Directors may, at its option, (i) redeem the Rights evidenced by this
Right Certificate at a redemption price of $.01 per Right or (ii)
exchange Common Shares for the Rights evidenced by this Certificate,
in whole or in part."
16. Clause (ii) of the second paragraph of Exhibit B to the Rights
Plan (SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES), is hereby amended to add the
words "or such later date as may be determined by the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person" after the word "days" and before the word "following".
17. The first sentence of the fourth paragraph of Exhibit B to the
Rights Plan (SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES) is hereby amended and
restated in its entirety as follows:
"The Rights Agreement provides that until the Distribution Date
(or earlier redemption, exchange, termination or expiration of the
Rights), the Rights will be transferred with and only with the Common
Shares."
18. The tenth paragraph of Exhibit B to the Rights Plan (SUMMARY OF
RIGHTS TO PURCHASE COMMON SHARES), is hereby amended to delete the words "public
announcement that a Person has become an Acquiring Person" and replace them with
the words "time that a Person becomes an Acquiring Person".
19. The eleventh paragraph of Exhibit B to the Rights Plan (SUMMARY
OF RIGHTS TO PURCHASE COMMON SHARES) is hereby deleted in its entirety.
20. The thirteenth paragraph of Exhibit B to the Rights Plan
(SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES) is hereby amended by deleting
clause (ii) thereof in its entirety, renumbering clause (iii) as (ii) and adding
the word "or" immediately prior to the new clause (ii).
21. This First Amendment shall be effective as of the date hereof
and, except as expressly set forth herein, the Rights Agreement shall remain in
full force and effect and be otherwise unaffected hereby.
21.1. This First Amendment may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all such counterparts shall together constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date first written above.
SUNRISE MEDICAL, INC.
By:/s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President, General
Counsel and Secretary
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:/s/ Xxx X. Xxxx
------------------------------------------
Name: Xxx X. Xxxx
Title: Assistant Vice President
