EXHIBIT 4.4
RIGHTS AGREEMENT
between
VITAL IMAGES, INC.
and
American Stock Transfer & Trust Company
dated as of May 1, 1997
TABLE OF CONTENTS
Section Page No.
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1. Certain Definitions......................................................................................... 1
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2. Appointment of Rights Agent................................................................................. 6
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3. Issue of Rights Certificates................................................................................ 7
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4. Form of Rights Certificates................................................................................. 8
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5. Countersignature and Registration........................................................................... 9
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6. Transfer, Split Up, Combination and Exchange of Rights
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Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates...................................... 10
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7. Exercise of Rights; Purchase Price; Expiration Date......................................................... 11
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8. Cancellation of Rights Certificates......................................................................... 12
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9. Reservation and Availability of Capital Stock; Registration................................................ 12
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10. Capital Stock Record Date................................................................................. 14
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11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights............................... 14
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12. Certificate of Adjusted Purchase Price or Number of Shares................................................ 22
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13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................................... 22
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14. Fractional Rights and Fractional Shares................................................................... 24
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15. Rights of Action.......................................................................................... 25
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16. Agreement of Rights Holders............................................................................... 25
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17. Rights Certificate Holder Not Deemed a Shareholder........................................................ 26
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18. Concerning the Rights Agent............................................................................... 26
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19. Merger or Consolidation or Change of Name of Rights Agent................................................. 27
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20. Duties of Rights Agent.................................................................................... 27
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21. Change of Rights Agent.................................................................................... 29
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22. Issuance of New Rights Certificates....................................................................... 30
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23. Redemption and Termination................................................................................ 30
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24. Exchange.................................................................................................. 30
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25. Notice of Certain Events.................................................................................. 31
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26. Notices................................................................................................... 32
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27. Supplements and Amendment................................................................................. 33
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28. Successors................................................................................................ 33
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ii
29. Determinations and Actions by the Board................................................................... 34
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30. Benefits of this Agreement................................................................................ 34
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31. Severability.............................................................................................. 34
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32. Governing Law............................................................................................. 34
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33. Counterparts.............................................................................................. 34
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34. Descriptive Headings...................................................................................... 34
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Exhibits
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A- Form of Certificate of Designation, Preferences and Rights of Series A
Junior Preferred Stock
B- Form of Rights Certificate
C- Summary of Rights Agreement
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RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT, dated as of May 1, 1997 (this "Agreement"), is
between Vital Images, Inc., a Minnesota corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation, as Rights
Agent (the "Rights Agent").
As of the date of this Agreement, all of the Company's issued and
outstanding capital stock consists of 1,000 of the Company's Common Shares (as
hereinafter defined), held beneficially and of record by the Company's parent
entity, Bio-Vascular, Inc., a Minnesota corporation ("Bio-Vascular"). In
connection with a proposed spin-off of all of the issued and outstanding capital
stock of the Company by Bio-Vascular (the "Spin-Off"), the Company will
authorize and issue additional Common Shares, which will be distributed pro-rata
to the Shareholders of Bio-Vascular, effective as of the close of business (as
hereinafter defined) on a date to be determined by the Board of Directors of
Bio-Vascular (the "Spin-Off Distribution Date").
In anticipation of the Spin-Off, and of the Company's resulting status as an
independent public Company thereafter, on April 30, 1997 (the "Rights
Dividend Declaration Date"), the Board of Directors of the Company (as the
composition of Board of Directors may change from time to time, the "Board")
authorized and declared a dividend distribution of one Right for each Common
Share of the Company outstanding at the close of business on May 1, 1997
(the "Record Date"), each Right (individually a "Right" and collectively the
"Rights") initially representing the right to purchase one one-thousandth of a
Preferred Share (as hereinafter defined) of the Company having the rights,
powers and preferences set forth in the form of the Certificate of Designation,
Preferences and Rights attached hereto as Exhibit A, upon the terms and subject
to the conditions hereinafter set forth, and has further authorized and directed
the issuance of one Right for each Common Share issued (i) between the Record
Date and the earlier of the Distribution Date or the Expiration Date (both as
hereinafter defined), including, but not limited to, each Common Share to be
issued and distributed in connection with the Spin-Off, or (ii) upon the
exercise or conversion, prior to the Expiration Date, of any option, warrant or
other security exercisable for or convertible into Preferred Shares or Common
Shares, which option, warrant or other security is outstanding on the
Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the following
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terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding
(other than as a result of a Permitted Offer (as hereinafter defined)), but
shall not include the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or of 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 holding Common Shares, or, prior
to or on the Spin-Off Distribution Date, Bio-Vascular. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person": (i) as the result
of an acquisition of Common Shares by the Company which, by reducing the
number of Common Shares outstanding, increases the proportionate number of
Common Shares beneficially owned by such Person to 15% or more of the
Common Shares then outstanding; provided, however, that if a Person,
together with all Affiliates and Associates of such Person, shall become
the Beneficial
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Owner of 15% or more of the Common Shares then outstanding by reason of
Common Share purchases by the Company and, together with all Affiliates and
Associates of such Person, shall thereafter become the Beneficial Owner of
any additional Common Shares, other than pursuant to the receipt of stock
dividends or stock splits on a pro rata basis on Common Shares already
beneficially owned by such Person, and, immediately after becoming the
Beneficial Owner of such additional shares, such Person, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the Common Shares then outstanding, then such Person (unless
such Person shall be the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or of 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 holding Common Shares, or, prior
to or on the Spin-Off Distribution Date, Bio-Vascular), shall be deemed to
be an "Acquiring Person"; or (ii) who beneficially owns 15% or more of the
outstanding Common Shares but who acquired Beneficial Ownership of Common
Shares without any plan or intention to seek or affect control of the
Company, if such Person promptly enters into an irrevocable commitment
promptly to divest, and thereafter promptly divests (without exercising or
retaining any power, including voting, with respect to such shares),
sufficient shares of Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares) so that such Person
ceases to be the Beneficial Owner of 15% or more of the outstanding shares
of Common Shares; or (iii) who beneficially owns Common Shares consisting
solely of one or more (A) Common Shares beneficially owned pursuant to the
grant for exercise of an option granted to such Person by the Company in
connection with an agreement to merge with, or acquire, the Company entered
into prior to a Section 11(a)(ii) Trigger Date, (B) Common Shares (or
securities convertible into, exchangeable into or exercisable for Common
Shares), beneficially owned by such Person or its Affiliates or Associates
at the time of grant of such option or (C) Common Shares (or securities
convertible into, exchangeable into or exercisable for Common Shares)
acquired by Affiliates or Associates of such Person after the time of such
grant which, in the aggregate, amount to less than 1% of the outstanding
Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
(d) "Adverse Person" shall mean any Person determined to be an Adverse
Person pursuant to the criteria set forth in Section 11(a)(ii)(B);
provided, however, that the in no event will Bio-Vascular be deemed an
Adverse Person prior to or on the Spin-Off Distribution Date.
(e) "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 hereof.
(f) "Agreement" shall have the meaning set forth in the preamble clause at
the beginning hereof.
(g) (i) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(A) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, beneficially owns;
(B) which such Person or any of such Person's Affiliates or
Associates,
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directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding,
whether or not in writing (other than customary agreements with
and between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, other rights,
warrants or options or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (1) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (2) securities
issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (3) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 (the "Original Rights")
or pursuant to Section 11(i) in connection with an adjustment
made with respect to any Original Rights;
(C) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right (sole or
shared) to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, or any comparable or
successor rule, whether or not the Company is subject to the
Exchange Act), including, without limitation, pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this Section 1(g)(i)(C) as a result of an oral or written
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (1) arises solely
from a revocable proxy given to such Person or any of such
Person's Affiliates or Associates in response to a proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act (and if such provisions are not applicable
by law, such proxy or solicitation is made in substantially the
same manner as if such provisions were applicable), and (2) is
not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report) (and if the
Company is not subject to the Exchange Act, would not be then
reportable if the Company was subject to the Exchange Act); or
(D) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding, whether or not
in writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in Section 1(g)(i)(C)(1)) or disposing of such
securities.
(ii) Notwithstanding anything in this definition to the contrary, the
phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities,
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shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued
and outstanding which such Person is deemed to own beneficially
hereunder.
(h) "Board" shall have the meaning set forth in the recital clause at the
beginning of this Agreement.
(i) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Minnesota are authorized
or obligated by law or executive order to close.
(j) "Close of business" on any given date shall mean 5:00 p.m. Minneapolis,
Minnesota time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 p.m. Minneapolis, Minnesota time on the
next succeeding Business Day.
(k) "Common Shares," when used with reference to the Company, shall mean
the shares of Common Stock, par value $.01 per share, of the Company.
"Common Shares," when used with reference to any Person other than the
Company, shall mean: (i) in the case of Persons organized in corporate
form, the shares of capital stock or units of equity security with the
greatest voting power of such Person or, if such Person is a Subsidiary of
another Person, of the Person or Persons which ultimately control or direct
the management of such first-mentioned Person, and (ii) in the case of
Persons not organized in corporate form, the units of beneficial interest
which (A) 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 (B) are
entitled to exercise the greatest voting power of such Person or, in the
case of a limited partnership, shall have the power to remove the general
partner or partners.
(l) "Common stock equivalents" shall have the meaning set forth in Section
11(a)(iii).
(m) "Company" shall have the meaning set forth in the preamble clause at
the beginning of this Agreement.
(n) "Continuing Director" shall mean (i) any Person who is a member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person or an Adverse Person, or an Affiliate or Associate of any such
Person, or a representative, nominee or designee of an Acquiring Person or
an Adverse Person or of any such Affiliate or Associate, and was a member
of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member
of the Board, who is not an Acquiring Person or an Adverse Person, or an
Affiliate or Associate of any such Person, or a representative, nominee or
designee of an Acquiring Person or an Adverse Person or of any such
Affiliate or Associate, if such Person's initial nomination for election or
initial election to the Board is recommended or approved by the Board at a
time when a majority of the members of the Board are Continuing Directors.
(o) "Current Market Price" shall have the meaning set forth in Section
11(d).
(p) "Current Value" shall have the meaning set forth in Section 11(a)(iii).
(q) "Distribution Date" shall have the meaning set forth in Section 3(a).
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(r) "Equivalent preferred shares" shall have the meaning set forth in
Section 11(b).
(s) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(t) "Exchange Ratio" shall have the meaning set forth in Section 24(a).
(u) "Expiration Date" shall have the meaning set forth in Section 7(a).
(v) "Final Expiration Date" shall mean the close of business on April 21,
2007.
(w) "Original Rights" shall have the meaning set forth in Section
1(g)(i)(B)(3).
(x) "Person" shall mean any individual, firm, corporation, partnership or
other entity.
(y) "Permitted Offer" shall mean a tender or exchange offer which is for
all outstanding Common Shares at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board at
a time when a majority of the members of the Board are Continuing Directors
to be fair to the Company's holders of Common Shares (taking into account
all factors that such directors deem relevant including, without
limitation, prices that could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interests of the Company and its shareholders (other
than the Person or any Affiliate or Associate thereof on whose behalf the
offer is being made), taking into account all factors as the Board may deem
relevant and which the Board, after receiving advice from one or more
investment banking firm selected by the Board, determines to recommend to
the Company's shareholders.
(z) "Preferred Share" shall mean a share of Series A Junior Preferred
Stock, par value $.01 per share, of the Company and, to the extent that
there are not a sufficient number of shares of Series A Junior Preferred
Stock authorized to permit the full exercise of the Rights, shares of 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
Preferred Stock.
(aa) "Preferred Share Fraction" shall mean one one-thousandth of a
Preferred Share.
(bb) "Principal Party" shall have the meaning set forth in Section 13(b).
(cc) "Purchase Price" shall have the meaning set forth in Section 4(a), and
shall initially be as set forth in Section 7(b).
(dd) "Record Date" shall have the meaning set forth in the recital clause
at the beginning of this Agreement.
(ee) "Redemption Price" shall have the meaning set forth in Section 23(a).
(ff) "Rights" shall have the meaning set forth in the recital clause at the
beginning of this Agreement.
(gg) "Rights Agent" shall have the meaning set forth in the preamble clause
at the beginning of this Agreement until a successor Rights Agent shall
have become such pursuant to the
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applicable provisions of this Agreement, and thereafter "Rights Agent"
shall mean such successor Rights Agent. If at any time there is more than
one Person appointed by the Company as Rights Agent pursuant to the
provisions of this Agreement, "Rights Agent" shall mean and include each
such Person.
(hh) "Rights Certificates" shall have the meaning set forth in Section
3(a).
(ii) "Rights Dividend Declaration Date" shall have the meaning set forth in
the recital clause at the beginning of this Agreement.
(jj) "Section 11(a)(ii) Election" shall mean the election described in
Sections 11(a)(ii)(x) and (y).
(kk) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B).
(ll) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii).
(mm) "Section 13 Event" shall mean any event described in clauses (i), (ii)
or (iii) of Section 13(a).
(nn) "Section 24(a) Election" shall have the meaning set forth in Section
24(a).
(oo) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(pp) "Stock Acquisition Date" shall mean the date of first public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(qq) "Subsidiary" shall mean, with reference to any Person, any other
Person of which at least a majority of the voting power of the voting
equity securities or equity interests is beneficially owned, directly or
indirectly, or otherwise controlled by such first-mentioned Person.
(rr) "Substitute Consideration" shall have the meaning set forth in Section
11(a)(iii).
(ss) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(tt) "Trading Day" shall have the meaning set forth in Section 11(d)(i).
(uu) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights
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Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such additional Rights Agents as it may deem necessary
or desirable.
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Section 3. Issue of Rights Certificates.
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(a) Until the first to occur of:
(i) the close of business on the tenth Business Day after the
Stock Acquisition Date (or, if the tenth Business Day after the
Stock Acquisition Date occurs before the Record Date, the close
of business on the Record Date),
(ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Board prior to such time
as any Person has become an Acquiring Person) after the date that
a tender or exchange offer (other than a Permitted Offer) by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or
established by the Company and holding Common Shares for or
pursuant to the terms of any such plan, or, prior to or on the
Spin-Off Distribution Date, Bio-Vascular) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act (or any comparable
or successor rule), if, upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the Common Shares
then outstanding, or
(iii) the close of business on the tenth Business Day after a
determination, pursuant to Section 11(a)(ii)(B), that a Person is
an Adverse Person,
(the first to occur of (i), (ii), and (iii) being herein referred
to as the "Distribution Date"), (A) the Rights will be evidenced
(subject to the provisions of Section 3(b)) by the certificates
for the Common Shares registered in the names of the holders
thereof (which certificates for Common Shares shall be deemed
also to be certificates for Rights where the context so requires)
and not by separate certificates and (B) the Rights will be
transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the Company).
As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date, the Rights
Agent will send by first-class, postage prepaid mail, to each
record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights certificates, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each Common Share so
held, subject to adjustment as provided herein. In the event that
an adjustment in the number of Rights per Common Share has been
made pursuant to Section 11(p), at the time of distribution of
the Right Certificates, the Company shall make and notify the
Rights Agent of the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Rights
Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As
of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) In connection with the Spin-Off, the Company will cause the
Information Statement to be provided to Bio-Vascular shareholders to
contain substantially the information set forth in the Summary of Rights
Agreement attached hereto as Exhibit C. With respect to certificates for
the Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates for
the Common Shares and the registered holders of the Common Shares shall
also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of
any certificates representing Common Shares in respect of which Rights
have been issued shall also constitute the transfer of
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the Rights associated with such Common Shares. Certificates issued after
the Record Date upon the transfer of Common Shares outstanding on the
Record Date shall bear the legend set forth in Section 3(c).
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date, including Common Shares issued and
distributed in the Spin-Off. Rights shall also be issued to the extent
provided in Section 22 in respect of all Common Shares which are issued
after the Distribution Date and prior to the Expiration Date and upon the
exercise or conversion, prior to the Expiration Date, of any option,
warrant or other security exercisable for or convertible into Common
Shares, which option, warrant or other security is outstanding on the
Distribution Date. Certificates representing Common Shares (including,
without limitation, certificates issued upon transfer or exchange of
Common Shares) issued after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date, including Common Shares
issued and distributed in the Spin-Off, shall also be deemed to be
certificates for the associated Rights, and shall bear the following
legend:
"This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Vital Images, Inc. (the "Company") and American Stock Transfer &
Trust Company (the "Rights Agent") dated as of May 1, 1997
(the "Rights Agreement"), and as the same may be amended from
time to time, the terms of which (including restrictions on the
transfer of such Rights) are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the
date of mailing, without charge after receipt of a written
request therefor from such holder. Under certain circumstances,
as set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person, an
Adverse Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), and any subsequent
holder of such Rights, whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and
void."
Until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the Common Shares represented by certificates for
Common Shares shall be evidenced by such certificates alone, and
registered holders of Common Shares shall also be the registered holders
of the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of the Rights associated with such
Common Shares, whether or not containing the foregoing legend. If the
Company purchases or acquires and cancels any Common Shares after the
Record Date but prior to the earlier of the Distribution Date or the
Expiration Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares that are no longer
outstanding.
Section 4. Form of Rights Certificates
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(a) The Rights Certificates (and the forms of election to exercise,
certification and assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or
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endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange, national market system or over-the-counter market on which the
Rights may from time to time be listed, to conform to usage, or to
reflect adjustments to the Rights made pursuant to this Agreement.
Subject to the provisions of Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall entitle the holders thereof to
purchase such number of Preferred Share Fractions as shall be set forth
therein at the price per Preferred Share Fraction set forth therein (the
"Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights beneficially owned by a Person reasonably
believed by the Board to be (i) an Acquiring Person, an Adverse Person or
any Associate or Affiliate of any such Person, (ii) a transferee of an
Acquiring Person or an Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or Adverse
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person (or from any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person or Adverse Person (or any such
Associate or Affiliate) or to any Person with whom such Acquiring Person
or Adverse Person (or any such Associate or Affiliate) has any continuing
oral or written plan, agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board has determined
is part of an oral or written plan, arrangement or understanding that has
as a primary purpose or effect avoidance of Section 7(e), and any Rights
Certificate issued to any such Person pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend, modified as applicable to such Person:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a person who was or became an [Acquiring]
[Adverse] Person or an Affiliate or Associate of an [Acquiring]
[Adverse] Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Agreement."
The provisions of Section 7(e) of this Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the
Company by its President and Chief Executive Officer or its Chief
Financial Officer and Vice President, Finance, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal
(if any) or a facsimile thereof, which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights
9
Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated by the Rights Agent as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the date of
each of the Rights Certificates and whether each such Rights Certificate
contains a legend as set forth in Section 4(b).
Section 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
----------------------------------------------------------------------
(a) Subject to the provisions of Section 4(b), Section 7(e), Section
14 and Section 20(k), at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase
a like number of Preferred Share Fractions (or, following a Triggering
Event, Common Shares, other securities, cash or other assets, as the case
may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine
or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined
or exchanged, with the form of assignment and certificate appropriately
executed, at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have duly completed
and executed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e), Section 14 and Section 20(k), countersign and
deliver to each Person entitled thereto a Rights Certificate or
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any transfer tax or charge
that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company's or the Rights Agent's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
10
Section 7. Exercise of Rights; Purchase Price; Expiration Date
---------------------------------------------------
(a) Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a)) in whole or in part, at any time after the
Distribution Date, upon surrender of the Rights Certificate, with the
form of election to exercise and the certificate on the reverse side
thereof duly completed and executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of
the aggregate Purchase Price for the total number of Preferred Share
Fractions (or Common Shares, other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the first to occur of: (i) the Final
Expiration Date; (ii) the time at which such Rights expire as provided in
Section 13(d); (iii) the time at which such Rights are redeemed as
provided in Section 23; or (iv) the time at which such Rights are
exchanged as provided in Section 24 (the first to occur of (i), (ii),
(iii) and (iv) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Preferred Share Fraction purchasable
pursuant to the exercise of a Right shall initially be $20.00 and shall
be subject to adjustment from time to time as provided in Section 11 and
Section 13(a) and shall be payable in accordance with Section 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise and certificate on the
reverse side thereof duly completed and executed, accompanied by payment
of the Purchase Price for each Preferred Share Fraction (or Common Share,
other securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax or charge,
the Rights Agent shall, subject to Section 14(b) and Section 20(k),
thereupon promptly (i) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer
agent for such Preferred Shares) certificates for the total number of
Preferred Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (ii)
requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14, (iii) promptly
after receipt of such certificates, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder, and
(iv) promptly after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii)) may be made by cash, certified bank check or money
order payable to the order of the Company. If the Company determines to
issue other securities of the Company (including without limitation, upon
an appropriate Section 11(a)(ii) Election or Section 24(a) Election,
Common Shares), pay cash and/or distribute other assets pursuant to
Section 11(a), the Company will make all arrangements necessary so that
such other securities, cash and/or other assets are available for
distribution by the Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of a Triggering
Event that, upon any exercise of Rights, a number of Rights be exercised
so that only whole Preferred Shares would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of
Section 14.
11
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or a Section
13 Event, any Rights that are or were beneficially owned by (i) an
Acquiring Person, an Adverse Person or any Associate or Affiliate of any
such Person, (ii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or (iii) a
transferee of an Acquiring Person or an Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person or Adverse Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or from any
such Associate or Affiliate) to holders of equity interests in such
Acquiring Person or Adverse Person (or any such Associate or Affiliate)
or to any Person with whom the Acquiring Person or Adverse Person (or any
such Associate or Affiliate) has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board has determined is part of an oral or
written plan, agreement, arrangement or understanding that has as a
primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, and any holder of such
Rights shall have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) are complied with, but shall have no
liability to any holder of a Rights Certificate or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person or Adverse Person or any of their respective Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported transfer or exercise as set forth in this Section 7 unless such
registered holder shall have (i) duly completed and executed the
certificate following the form of assignment or election to exercise set
forth on the reverse side of the Rights Certificate surrendered for such
assignment or exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation of Rights Certificates. All Rights Certificates
-----------------------------------
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock; Registration
------------------------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available for issuance prior to the Expiration Date
upon the exercise of outstanding Rights as many of its authorized and
unissued Preferred Shares (and, following the occurrence of a Triggering
Event, if applicable, out of its authorized and unissued Common Shares
and/or other securities) which together at all times after the
Distribution Date as provided in this Agreement, including Section
11(a)(iii), will be sufficient to permit the exercise in full of all
outstanding Rights pursuant to Section 7(a).
12
(b) If the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares or other securities, if applicable)
issuable and deliverable upon the exercise of the Rights are listed or
admitted for trading on any national securities exchange or included for
quotation on any national market system, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares and other securities reserved for such issuance
to be listed or admitted for trading on such national securities exchange
or included for quotation on any such national market system upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by
the Company upon exercise of the Rights has been determined pursuant to
this Agreement, including in accordance with Section 11(a)(iii), or as
soon as is required by law following the Distribution Date, as the case
may be, a registration statement or statements under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form or forms, (ii) cause such registration
statement or statements to become effective as soon as practicable after
such filing, and (iii) cause such registration statement or statements to
remain effective (with a prospectus at all times meeting the requirements
of the Act) until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities or (B) the Expiration Date. The
Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various
states. The Company may temporarily suspend, for a period of time not to
exceed 90 days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement or statements and permit
it or them to become effective. Upon any such suspension, the Company
shall either advise in writing all shareholders of record as of that date
or issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as either advise in
writing all shareholders of record as of that date or issue a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualifications in such jurisdiction, if any, shall have been obtained,
the exercise thereof shall not be permitted under applicable law or a
registration statement (if required by law) shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares or other
securities, if applicable) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares or other
securities (subject to payment of the Purchase Price and any applicable
transfer taxes or charges), be duly and validly authorized and issued
and, with respect to Preferred Shares, Common Shares or other shares of
capital stock, fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for Preferred Share Fractions (or
Common Shares or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required (i) to pay any
transfer tax or charge that may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance
or delivery of a number of Preferred Share Fractions (or Common Shares or
other securities, as the case may be) in respect of a name other than
that of the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or (ii) to issue or deliver any certificates for
a number of Preferred Share Fractions (or Common Shares or other
securities,
13
as the case may be) in a name other than that of the registered holder
upon the exercise of any Rights until such tax or charge shall have been
paid (any such tax or charge being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax or charge is due.
Section 10. Capital Stock Record Date. Each Person in whose name any
-------------------------
certificate for a number of Preferred Share Fractions (or Common Shares 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 such Preferred
Share Fractions (or Common Shares or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the applicable transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares (or other securities,
as the case may be), fractional or otherwise, on, and such certificate shall be
dated, the next succeeding Business Day on which the applicable transfer books
of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate, as such, shall not be entitled to any rights
of a shareholder of the Company with respect to Preferred Share Fractions (or
Common Shares or other securities, as the case may be) for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions, or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
-----------------------------------------------------------------
of Rights. The Purchase Price, the number and kind of Preferred Shares, Common
---------
Shares or other securities covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11:
(a)
(i) If the Company shall at any time after the date of this
Agreement (A) declare or pay any dividend on any security of the
Company payable in Preferred Shares, (B) subdivide or split the
outstanding Preferred Shares, (C) combine or consolidate the
outstanding Preferred Shares into a smaller number of shares or
effect a reverse stock split of the outstanding Preferred Shares,
or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section
7(e), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision,
split, combination, consolidation, reverse stock split or
reclassification, and the number and kind of shares of capital
stock issuable on such date (and any applicable transfer taxes or
charges), 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 (and any
applicable transfer taxes or charges), the aggregate number and
kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
Company's transfer books for the Preferred Shares (or other
capital stock, as the case may be) were open, such holder would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, split, combination,
consolidation, reverse stock split, or reclassification. If an
event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required
14
pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event:
(A) Any Person shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person,
unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section
13(a), or
(B) the Board shall declare any Person (other than Bio-
Vascular, prior to or on the Spin-Off Distribution Date)
to be an Adverse Person, upon a determination by the Board
that such Person, alone or together with its Affiliates or
Associates, has, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of a
substantial amount of Common Shares, which amount shall in
no event be less than the greater of (1) 10% of the Common
Shares then outstanding or (2) the sum of .001% and the
largest percentage of the outstanding Common Shares then
known by the Company to be beneficially owned by any
Person (other than the Company, any subsidiary of the
Company, or any employee benefit plan of the Company or
any Subsidiary of the Company, or any Person organized,
appointed or established by the Company and holding Common
Shares for or pursuant to the terms of any such plan, or
prior to or on the Spin-Off Distribution Date, Bio-
Vascular) and a determination by the Board, after
reasonable inquiry and investigation, including
consultation with such Persons as the Board shall deem
appropriate, that (x) such Beneficial Ownership by such
Person is intended to cause the Company to repurchase the
Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into
a transaction or series of transactions intended to
provide such Person or its Affiliates or Associates with
short-term financial gain under circumstances where the
Board determines that the best long-term interests of the
Company and its shareholders would not be served by taking
such action or entering into such transaction or series of
transactions at that time or (y) such Beneficial Ownership
is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment
of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on
the business or prospects of the Company,
then, promptly following the first occurrence of a Section
11(a)(ii) Event, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e))
shall thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price, in accordance with the terms
of this Agreement if no Section 11(a)(ii) Event or Section 13
Event had occurred, (xx) such number of Preferred Share
Fractions, or (yy) at the election of the Board and in lieu of a
number of Preferred Share Fractions (a "Section 11(a)(ii)
Election"), such number of Common Shares that equals the result
obtained by (xxx) multiplying the then current Purchase Price if
no Section 11(a)(ii) Event or Section 13 Event had occurred by
the then number of Preferred Share Fractions for which a Right
was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event if no Section 11(a)(ii) Event or Section
13 Event had occurred, and (yyy) dividing that product (which,
following such first occurrence, shall thereafter be referred to
as the "Purchase Price" for each Right for all purposes of this
Agreement) by one one-thousandth of 50% of the Current Market
Price (determined pursuant to Section 11(d)(ii)) per Preferred
Share, or 50% of the current market price (determined
15
pursuant to Section 11(d)(ii)) per Common Share, as the case may
be, on the date of such first occurrence (such number of shares,
the "Adjustment Shares").
(iii) If the number of Preferred Shares (or Common Shares, if
applicable) that are authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights ("Available
Shares") are not sufficient to permit the exercise in full of all
of the exercisable Rights in accordance with Section 11(a)(ii),
the Company shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right,
use its best efforts to make adequate provision to
substitute in xxxx xxxxx of the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Preferred Shares,
Common Shares and/or other equity securities of the
Company (including, without limitation, shares, or units
of shares, of preferred stock which based on, among other
things, the dividend and liquidation rights of such
preferred shares, have substantially the same economic
value as Common Shares (such shares of preferred stock,
"common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing (whichever substituted, the "Substitute
Consideration"), having an aggregate value equal to the
Current Value, where such aggregate value has been
determined by the Board based upon the advice of an
investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate
provision to deliver substitute consideration pursuant to
clause (B) above within 30 days following the later of (x)
the date of the occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be
obligated to use its best efforts to obtain shareholder
approval for the authorization of additional Preferred
Shares (or Common Shares, as the case may be) within 90
days after the Section 11(a)(ii) Trigger Date (such
period, as it may be extended, the "Substitution Period")
to enable each holder of Rights that have not become void
pursuant to Section 7(e) to receive aggregate value equal
to the Spread. To the extent that some action need be
taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (xx) shall provide,
subject to Section 7(e), that such action shall apply
uniformly to all outstanding Rights, (yy) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence
and to determine the value thereof, and (zz) shall not
provide Substitute Consideration except to the extent that
the aggregate number of Adjustment Shares for which Rights
are then exercisable exceeds the number of Available
Shares. In the event of any such suspension, the Company
shall give notice to the Rights Agent and either advise in
writing all shareholders of record as of that date or
issue a public announcement stating that the
exercisability of the Rights has been temporarily
suspended, as well as a notice to the Rights Agent and
either a written notice to all shareholders of record or a
public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii),
(xxx)
16
the value of the Preferred Shares shall be the Current Market
Price (as determined pursuant to Section 11(d)(ii)) per Preferred
Share on the Section 11(a)(ii) Trigger Date, (yyy) the value of
the Common Shares (if applicable) shall be the Current Market
Price (as determined pursuant to Section 11(d)(i)) per Common
Share on the Section 11(a)(ii) Trigger Date, and (zzz) the value
of any other "common stock equivalent" shall be deemed to have
the same value as a Common Share on such date. Notwithstanding
anything herein stated, the purchase price of a Right shall not
be less than the aggregate par value of the Preferred Shares or
Common Shares purchased upon exercise of a Right. If, despite
the best efforts of the Company, there is insufficient Substitute
Consideration available to enable each holder of Rights that have
not become void pursuant to Section 7(e) to receive aggregate
value equal to the Spread, neither the Company nor the members of
the Board shall be liable in any respect.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of any security of the Company entitling
them to subscribe for or purchase (for a period expiring within 45 calendar
days after such record date) Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than
the Current Market Price (as determined pursuant to Section 11(d)(ii)) per
Preferred Share on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on
such record date, plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or equivalent
preferred shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at
such Current Market Price, and the denominator of which shall be the number
of Preferred Shares outstanding on such record date, plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid by delivery of consideration part or all of
which may in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights. Preferred Shares owned
by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular quarterly dividend out of the earnings or retained
earnings of the Company), non-cash assets (other than a regular quarterly
dividend referred to above or a dividend payable in Preferred Shares, but
including any dividend payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section
11(b)), the Purchase Price
17
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d)(ii)) per Preferred Share on such
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 and shall be binding on the Rights Agent and the holder of the
Rights) of the portion of the cash, non-cash assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to a Preferred Share, and the denominator of which
shall be such Current Market Price (as determined pursuant to Section
11(d)(ii)) per Preferred Share; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall 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), the "Current Market
Price" per Common Share on any date shall be deemed to be the average
of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii), the "Current Market Price" per share
of Common Shares on any date shall be deemed to be the average of the
daily closing prices per share of such Common Shares for the 10
consecutive Trading Days immediately following such date; provided,
however, that in the event that the Current Market Price per share of
the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than the
Rights), or (B) any subdivision, split, combination or
reclassification of such Common Shares, and prior to the expiration of
the requisite 30 Trading Day or 10 Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, split, combination or
reclassification, 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 Trading Day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last sale
price or, if not so reported, the average of the high bid and low
asked prices in the over-the-counter market, as reported by The Nasdaq
National Market or The Nasdaq SmallCap Market or such other system
then in use, or, if on any such date the Common Shares are not quoted
or reported by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a
market in the Common Shares selected by the Board. If on any such
date no professional market maker is making a market in the Common
Shares, the "Current Market Price" per share shall mean the fair value
per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights. The term "Trading Day" shall mean a day on which the
principal national securities exchange on
18
which the Common Shares are listed or admitted to trading is open for
the transaction of business or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the "Current Market
Price" per Preferred Share shall be determined in the same manner as
set forth above for the Common Shares in Section 11(d)(i) (other than
the last sentence thereof). If the Current Market Price per Preferred
Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner
described in Section 11(d)(i), the "Current Market Price" per
Preferred Share shall be conclusively deemed to be an amount equal to
one thousand (1000) (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations
with respect to the Common Shares occurring after the date of this
Agreement) multiplied by the Current Market Price per Common Share.
If neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "Current Market Price" per Preferred
Share shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. For all purposes of this Agreement,
the "Current Market Price" of a Preferred Share Fraction shall be
equal to the "Current Market Price" of one Preferred Share divided by
one thousand (1000).
(e) Anything herein to the contrary notwithstanding, except the last
sentence of this Section 11(e), no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandths of a Common Share or other share (other than
Preferred Shares) or one-millionth of a Preferred Share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any
adjustment which would be required by this Section 11, but for the first
sentence of this Section 11(e), shall be made no later than the earlier of
(i) three years from the date of the transaction or event which mandates
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares 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 Preferred Shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares 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 Preferred Share
Fractions (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
19
(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 Preferred Share Fractions (calculated to the
nearest one-millionth of a Preferred Share) obtained by (i) multiplying (A)
the number of Preferred Share Fractions covered by a Right immediately
prior to this adjustment, by (B) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company, acting by the decision of the Board, may elect on or after
the date of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of Preferred Share
Fractions 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 Preferred Share Fractions 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-millionth of a Preferred
Share) 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
either advise in writing all shareholders of record as of that date or make
a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least 10 Business Days
later than the date of written advice to all shareholders of record or the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or at
the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record
date specified in the written notice to shareholders or the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Share Fractions issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Preferred Share Fraction and the
number of Preferred Share Fractions which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated or par value, if any, of the number of
Preferred Share Fractions issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully
paid and non-assessable Preferred Share Fractions at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until
20
the occurrence of such event the issuance to the holder of any Right
exercised after such record date the Preferred Share Fractions and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Preferred Share Fractions and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares or securities (fractional or
otherwise) upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in its sole discretion the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at
less than the Current Market Price, or (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (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 Preferred Shares shall not be taxable to
such shareholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date and prior to the Expiration Date, (i) consolidate
with any Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)), if (A)
at the time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation,
merger, sale or transfer, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates, or (C) with respect to a
transaction of the nature listed in Section 11(a)(ii), there are
insufficient Available Shares to permit the exercise in full of the Rights,
except to the extent that Substitute Consideration has been substituted.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23, Section 24 or Section 27, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights, unless such action is approved by the Board.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare or pay any
dividend on the outstanding Common Shares payable in Common Shares, (ii)
subdivide or split the outstanding Common Shares, or (iii) combine or
consolidate the outstanding Common Shares into a smaller number of Common
Shares or effect a reverse stock split of the outstanding Common Shares, or
(iv) issue any shares of its capital
21
stock in a reclassification of the Common Shares (including any such
reclassification in connection with the consolidation or merger in which
the Company is the continuing or surviving corporation), the number of
Rights associated with each Common Share then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each Common Share following any such event shall equal the result
obtained by multiplying the number of Rights associated with each Common
Share immediately prior to such event by a fraction, the numerator of which
shall be the number of Common Shares outstanding immediately prior to the
occurrence of such event and the denominator of which shall be the total
number of Common Shares outstanding following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred
Shares and the Common Shares, a copy of such certificate, and (c) if such
adjustment is made after the Distribution Date, mail a brief summary thereof to
each holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing Common Shares) in accordance with
Section 26. The Rights Agent shall be fully authorized to rely and be protected
in relying on any such certificate and on any adjustment therein described.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power
-----
(a) If, following the Stock Acquisition Date, directly or indirectly,
(i) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o)) shall consolidate with,
or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of
the outstanding Common Shares held by existing shareholders of the
Company shall be changed into or exchanged for stock or other
securities of any Person or cash or any other property (except as the
result of statutory dissenters' rights), or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets, or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)),
then, and in each such case, except as contemplated by Section 13(d),
proper provision shall be made so that: (A) each holder of a Right,
except as otherwise provided herein, shall thereafter have the right
to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement if no Section
11(a)(ii) Event or Section 13 Event had occurred, such number of
validly authorized and issued, fully paid, non-assessable and freely
tradeable Common Shares of the Principal Party,
22
not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price if no Section 11(a)(ii)
Event or Section 13 Event had occurred by the number of Preferred
Share Fractions for which a Right would be exercisable immediately
prior to the first occurrence of a Section 13 Event if no Section
11(a)(ii) Event or Section 13 Event had occurred and (2) dividing that
product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right for all
purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)) per Common Share of such
Principal Party on the date of consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a
Section 13 Event; (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of its Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise
of the Rights; and (E) the provisions of Section 11(a)(ii) shall be of
no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in Section 13(a)(i) or (ii), the Person that is the issuer of any
securities into which Common Shares are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation, and (ii) in the case of any
transaction described in Section 13(a)(iii), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
any such case, (A) if the Common Shares of such Person are not at such time
and have not been continuously over the preceding 12 month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Shares of which
are and have been so registered, "Principal Party" shall refer to such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value.
(c)
(i) The Company shall not consummate any such transaction constituting
a Section 13 Event unless the Principal Party shall have a sufficient
number of authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company
and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set
forth in Sections 13(a) and (b) and further providing that, as soon as
practicable after the date of consummation of any transaction
constituting a Section 13 Event, the Principal Party will (A) prepare
and file a registration statement under the Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on
an appropriate form, and will use its best efforts to cause such
registration statement to (1) become effective as soon as practicable
after such filing and (2) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date,
and (B) will deliver to holders of the
23
Rights historical financial statements for the Principal Party and
each of its Affiliates that comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
(ii) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. If
a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (i) and
(ii) of Section 13(a) if: (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a Permitted Offer
(or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares
were purchased pursuant to such Permitted Offer, and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(p), or to
distribute Rights Certificates that evidence fractional Rights. The
Company may, in lieu of such fractional Rights, pay to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are
not listed or admitted to trading on any national securities exchange, the
last sale price or, if not so reported, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq
System or such other system then in use or, if on any such date the Rights
are not reported or quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board. If on any such date
no such professional market maker is making a market in the Rights, the
fair value of the Rights on such date shall be as determined in good faith
by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights.
(b) The Company shall not be required to issue fractions of Preferred
Shares upon exercise of the Rights or to distribute certificates that
evidence fractional Preferred Shares, except in each case, and prior to the
Stock Acquisition Date, fractions which are integral multiples of Preferred
Share Fractions. The Company may, in lieu of fractional Preferred Shares
which are not integral multiples of Preferred Share Fractions, pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one Preferred Share. For purposes of this
Section 14(b), the
24
current market value of a Preferred Share shall be as determined pursuant
to Section 11(d)(ii) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event and at or after a
Section 11(a)(ii) Election or Section 24(a) Election, the Company shall not
be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates that evidence fractional Common Shares. The
Company may, in lieu of fractional Common Shares, pay to the registered
holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For purposes of this Section 14(c), the
current market value of one Common Share shall be as determined pursuant to
Section 11(d)(i) for the Trading Day immediately prior to the date of such
exercise.
(d) In the event the Company determines it advisable to issue fractions of
Rights, fractions of Preferred Shares for fractions which are not integral
multiples of Preferred Share Fractions or fractions of Common Shares as
permitted in this Agreement, the Company shall immediately so notify the
Rights Agent at least five Business Days prior to the date such fractions
are to be issued. The Company and the Rights Agent shall then adopt
mutually agreeable procedures with respect to any such issuance. If the
Company and the Rights Agent are unable to agree upon such procedures, the
Rights Agent may resign and be discharged from its duties under this
Agreement or the Company may remove the Rights Agent, both as set forth in
Section 21; provided, however, that only one day's prior written notice
need be given of such resignation or removal.
(e) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights, or any fractions of Preferred
Shares for fraction which are not integral multiples of a Preferred Share
Fraction, or any fractional Common Shares (if applicable) upon exercise of
a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
associated Common Share certificates). Any registered holder of any Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, the associated
Common Share certificate), may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights in the manner provided 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
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by accepting
---------------------------
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Shares;
(b) on or after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of transfer
25
and with the appropriate forms and certificates duly completed and fully
executed and otherwise complying with any other requirements set forth in
this Agreement;
(c) subject to Section 6(a) and Section 7(f), the Company and the Rights
Agent may deem and treat the Person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to the
last sentence of Section 7(e), shall be required to be affected by any
notice or knowledge to the contrary; and
(d) Notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Board and the Rights Agent shall not have any
liability to any holder of a Right or other Person as a result of the
inability of the Company or the Rights Agent to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
--------------------------------------------------
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of Preferred Share Fractions
or any other securities of the Company (including the Common Shares) which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the acceptance,
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability
or expense incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance, administration and execution of
this Agreement and the exercise and performance of its duties hereunder,
including without limitation the costs and expenses of defending against
and appealing any such claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement or other paper or document
26
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent
---------------------------------------------------------
(a) Any 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 corporate
trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
Person would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed, and
at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under
its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates
either in its prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates (or, prior to
the Distribution Date, the associated Common Share certificates), by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it (who may
be legal counsel for the Company), and the advice of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken, suffered or omitted by it in good faith and in accordance
with such advice.
(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 or
Adverse Person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of its President and Chief
Executive Officer, or its Chief Financial Officer and Vice President,
Finance, and delivered to the Rights Agent; and any such certificate shall
be full and complete authorization and protection to the Rights Agent for
any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
27
(c) The Rights Agent shall not be liable or responsible hereunder except
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any 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 Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under
the provisions of Section 11, Section 13 or Section 24 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 Rights Certificates after
receipt of a certificate delivered pursuant to Section 12 describing any
such adjustment); nor shall it be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares or Common Shares will,
when so issued, be validly authorized and issued, fully paid and non-
assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions or direction with respect to the administration of this
Agreement and the exercise and performance of its duties hereunder from any
one of the Company's President and Chief Executive Officer, or its Chief
Financial Officer and Vice President, Finance, and to apply to such
officers for advice, instructions or direction in connection with its
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions or direction of
any such officer or for any delay in acting while waiting for those
instructions or direction.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent or any shareholder, director, officer or employee of the
Rights Agent from acting in any other capacity for the Company or for any
other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be liable
or responsible for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss or damages to the Company resulting
from any such act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued employment
thereof.
28
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights
or powers if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to exercise, as the case may be, has either
not been duly completed and executed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer until it has
received instructions with respect thereto from the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor Rights
----------------------
Agent may resign and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company, and to each transfer agent of the
Common Shares and the Preferred Shares the existence of which the Rights Agent
has received notice from the Company, by registered or certified mail, and to
the registered holders of the Rights Certificates after the Distribution Date
(or, prior to the Distribution Date, the associated Common Share certificates)
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and the Preferred Shares, by registered or certified mail, and to
the registered holders of the Rights Certificates after the Distribution Date
(or, prior to the Distribution Date, the associated Common Share certificates)
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the registered holder of a Rights Certificate
(or, prior to the Distribution Date, the associated Common Share certificate)
who shall, with such notice, submit such holder's Rights Certificate (or, prior
to the Distribution Date, the associated Common Share certificate) for
inspection by the Company, then such registered holder may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States,
the State of Minnesota or the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of Minnesota or the State of New York) in good
standing, having an office in the State of Minnesota or the State of New York,
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $5 million or an affiliate of such a corporation. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for such 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 Shares and the
Preferred Shares, and, after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates (or, prior to the
Distribution Date, the associated Common Share certificates) by first-class
mail. Failure to give any notice provided for in this Section 21 or to appoint
a successor Rights Agent, 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.
29
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, but subject to
Section 7(e), the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be specified by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement.
Section 23. Redemption and Termination
--------------------------
(a) Subject to the provisions of Section 27, the Board may, at its option,
at any time prior to the first to occur of the close of business on (i) the
tenth Business Day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close of
business on the tenth Business Day following the Record Date), (ii) the
tenth Business Day after a determination, pursuant to Section 11(a)(ii)(B),
that a person is an Adverse Person, or (iii) the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price") and the Company may, at its option,
pay the Redemption Price in Preferred Shares (based on the "Current Market
Price," as defined in Section 11(d)(ii) of the Preferred Shares at the time
of redemption), Common Shares (based on the "Current Market Price," as
defined in Section 11(d)(i) of the Common Shares at the time of
redemption), cash or any other form of consideration deemed appropriate by
the Board. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired. The Company shall promptly notify the
Rights Agent following the action of the Board ordering redemption of the
Rights.
(b) Immediately upon the action of the Board ordering the redemption of the
Rights pursuant to this Section 23, and without any further action and
without any notice, the right to exercise the Rights will terminate, and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the registered holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent for the Common Shares; provided, however, the failure to give or any
defect in any such notice shall not affect the validity of such redemption.
Any notice which is mailed in the manner provided in Section 26 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.
Section 24. Exchange
--------
(a) The Board may, at its option, at any time after a Section 11(a)(ii)
Event, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e)) for Preferred Share Fractions (or, at the
election of the Board (a "Section 24(a) Election"), Common Shares) at an
exchange ratio of one Preferred Share Fraction (or Common Share, as the
case may be) per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
30
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to Section 24(a) and without any further action and without
any notice, the right to exercise such Rights shall terminate, and the only
right thereafter of a holder of such Rights shall be to receive that number
of Preferred Share Fractions (or Common Shares, as the case may be) equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly notify the Rights Agent and give public
notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed in
the manner provided in Section 26 shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the
method by which the exchange of Preferred Share Fractions (or Common
Shares, as the case may be) for Rights will be effected and, in the event
of any partial exchange, shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to the provision
of Section 7(e)) held by each holder of Rights.
(c) If there are not sufficient Preferred Shares (or Common Shares, if
applicable) issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24,
the Company shall take all such action as may be necessary to authorize
additional Preferred Shares (or Common Shares, as the case may be) for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common Shares
or Preferred Shares or to distribute certificates which evidence fractional
Common Shares or Preferred Shares, except in each case for fractions of
Preferred Shares which are integral multiples of Preferred Share Fractions.
In lieu of such fractional Preferred Shares which are not integral
multiples of Preferred Share Fractions, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Preferred Shares would otherwise be issuable, an amount in cash
equal to the same fraction of the Current Market Value of a whole Preferred
Share, as determined pursuant to the second sentence of Section 11(d)(ii),
for the Trading Day immediately prior to the date of exchange pursuant to
this Section 24.
(e) If applicable, the Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, there shall be
paid to the registered holders of the Rights Certificates with regard to
which such fractional Common Shares would otherwise be issuable, an amount
in cash equal to the same fraction of the Current Market Value of a whole
Common Share. For the purposes of this Section 24(e), the Current Market
Value of a whole Common Share shall be as determined pursuant to Section
11(d)(i) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events
------------------------
(a) If the Company shall propose, at any time after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders
of Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with any other Person (other
31
than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o)), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to each
registered holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered
by Section 25(a)(i) or (ii) at least ten Business Days prior to the record
date for determining holders of Preferred Shares for purposes of such
action, and in the case of any such other action, at least ten Business
Days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Preferred Shares, whichever shall
be the earlier.
(b) In case any Triggering Events shall occur, then, in any such case, (i)
the Company shall as soon as practicable thereafter give to each registered
holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii) or Section 13, and (ii) in the event of an
appropriate Section 11(a)(ii) Election or Section 24(a) Election, all
references in Section 25(a) shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Section 26. Notices
-------
(a) Notices, communications or demands authorized by this Agreement to be
given or made by the Rights Agent or by the registered holder of any Rights
Certificate (or, prior to the Distribution Date, the associated Common
Share certificate) to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Vital Images, Inc.
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Winthrop & Weinstine, P.A.
0000 Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxxx, Esq.
32
(b) Subject to the provisions of Section 21, notices, communications or
demands authorized by this Agreement to be given or made by the Company or
by the holder of any Rights Certificate (or, prior to the Distribution
Date, the associated Common Share certificate) to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Company) as follows:
American Stock Transfer & Trust Company
[Address]
Attention: __________________
(c) Notices, communications or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the registered holder
of any Rights Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company
maintained by the Company, the Rights Agent or the transfer agent for the
Common Shares, as appropriate.
Section 27. Supplements and Amendments. Prior to the Distribution Date and
--------------------------
subject to the penultimate sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement, including without limitation to modify or amend the
definition of Acquiring Person set forth in Section 1(a) hereof, to change the
Purchase Price set forth in Section 4(a) and Section 7(b) hereof, and to extend
the Final Expiration Date, without the approval of any holders of certificates
representing Common Shares and without the approval of any holders of Rights or
holders of certificates representing Rights. From and after the Distribution
Date and subject to the penultimate sentence of this Section 27, 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 Rights Certificates in order
(a) to cure any ambiguity herein, (b) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein, or (c) to otherwise change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
Rights Certificates evidencing Rights that shall have become null and void
pursuant to Section 7(e)). 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 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which lowers the thresholds for an Acquiring Person or Adverse Person to less
than the greater of (i) the sum of .001% and the largest percentage of
outstanding Common Shares then known by the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company, or any Person
organized, appointed or established by the Company and holding Common Shares for
or pursuant to the terms of any such plan, or, prior to or on the Spin-Off
Distribution Date, Bio-Vascular) or (ii) 10% of the outstanding Common Shares;
which extends the period during which Rights may be redeemed unless at the time
of the amendment, no Person has become an Acquiring Person or designated an
Adverse Person or a majority of the Board of Directors are Continuing Directors;
or which changes the Redemption Price or the number of Preferred Share Fractions
for which a Right is exercisable. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
Section 28. Successors. All the covenants and provisions of this Agreement by
----------
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
33
Section 29. Determinations and Actions by the Board. For all purposes of this
---------------------------------------
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3d(d)(1)(i) of
the General Rules and Regulations under the Exchange Act, whether or not the
Common Shares are registered under the Exchange Act. 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 calculations and determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend or supplement this Agreement). All
such actions, calculations, interpretations and determinations (including for
purposes of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith shall (i) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (ii) not subject the Board or any director to any liability
to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the associated Common Share certificates) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable for any purpose or under any set of
circumstances or as applied to any Person, such invalid, void or unenforceable
term, provision, covenant or restriction shall continue in effect to the maximum
extent possible for all other purposes, under all other circumstances and as
applied to all other Persons, and 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 or the Rights 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, at a time when a majority of its Directors are Continuing Directors,
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose of effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth Business Day following the
date of such determination by the Board.
Section 32. Governing Law. This Agreement, each Right and each Rights
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the Sections of this
--------------------
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: VITAL IMAGES, INC.
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Title:_________________________ Title:_________________________
Attest: American Stock Transfer &
Trust Company
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Title:_________________________ Title:_________________________
35
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER 5:00 P.M., MINNEAPOLIS, MINNESOTA TIME, ON APRIL 30, 2007
OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT, AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT REFERRED TO HEREIN. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
[ACQUIRING] [ADVERSE] PERSON OR AN AFFILIATE OR ASSOCIATE OF AN [ACQUIRING]
[ADVERSE] PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.] 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.*
------------------
*The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person or an Adverse Person, as
applicable, and shall replace the preceding sentence.
1
VITAL IMAGES, INC.
------------------
RIGHTS CERTIFICATE
------------------
This certifies that ______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 1, 1997 (the "Rights Agreement"), between Vital
Images, Inc., a Minnesota corporation (the "Company"), and American Stock
Transfer & Trust Company, a _____________ corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m. (Minneapolis,
Minnesota time) on April 30, 2007 at the office of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-thousandth of one
fully paid and non-assessable share of the Company's Series A Junior Preferred
Stock, par value $.01 per share (the "Preferred Shares"), at a purchase price
(the "Purchase Price") of $20.00 per one one-thousandth of a Preferred Share
(such fraction, a "Preferred Share Fraction") upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly completed and executed. The Purchase Price may be paid by cash,
certified bank check or money order payable to the order of the Company. The
number of Rights evidenced by this Rights Certificate (and the number of
Preferred Share Fractions which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per Preferred Share Fraction set forth
above, are the number and Purchase Price as of the close of business on
__________________ ____________________, 1997, based on the Preferred Shares as
constituted at such date. Pursuant to the Rights Agreement, the Company reserves
the right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only whole
Preferred Shares will be issued.
Capitalized terms used herein without definition shall have the meaning
given to them in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by
this Rights Certificate are beneficially owned by (i) an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person, (ii) a
transferee of any such Acquiring Person, Adverse Person, Associate or Affiliate,
or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person, such Rights
shall become null and void 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.
As provided in the Rights Agreement, the Purchase Price (in certain limited
circumstances) and the number and kind of Preferred Shares or other securities
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events. In certain circumstances, and as
described in the Rights Agreement, Common Shares, cash, property or other
securities may be issued by the Company upon the exercise hereof in lieu of
Preferred Shares.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal offices of the
Company and the
2
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
Subject to the provisions of the Rights Agreement, this Rights Certificate,
with or without other Rights Certificates, upon surrender at the office or
offices of the Rights Agent designated for such purpose, with the Form of
Election and Certificate set forth on the reverse side duly executed, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Preferred Shares Fractions as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed, subject to adjustment as provided in the
Rights Agreement, at a redemption price of $.001 per Right at any time prior to
the earlier of the close of business on (i) the tenth Business Day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), (ii) the tenth Business Day after a determination that a
Person is an Adverse Person, or (iii) the Final Expiration Date.
Subject to the provisions of the Rights Agreement, the Company may, at its
option, at any time after a Section 11(a)(ii) Event, exchange all or part of the
Rights evidenced by this Certificate for Preferred Share Fractions, or, upon an
appropriate Section 24(a) election, Common Shares.
No fractional Preferred Shares will be issued upon the exercise of any Right
or Rights evidenced hereby (other than fractions which are integral multiples of
a Preferred Share Fraction), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company (including Common Shares) which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated:____________________________
ATTEST:___________________________ VITAL IMAGES, INC.
__________________________________ By:_____________________________________
Title:__________________________________
3
Countersigned:
[RIGHTS AGENT]
By:_______________________________
Authorized Officer
4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated:________________________________
Enter taxpayer identification
number of transferee ====================================
Tax ID #:
====================================
The signature must correspond in ====================================
every particular, without alteration, Sign here:
with the name(s) as printed on your
certificate. If acting in a special
capacity (executor, administrator,
custodian, etc.), the capacity
must be indicated. ====================================
SIGNATURE GUARANTEED
MEDALLION GUARANTEED*
___________________________________
(Authorized Signature)
*The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange
Medallion Program ("SEMP") or New York Stock Exchange, Inc. Medallion Signature
Program ("MSP").
5
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person
(as such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any
such Person.
Date:_____________________________ _______________________________________
Signature
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
__________________________________
Authorized Signature
NOTICE
------
The signature to the foregoing Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: Vital Images, Inc.
The undersigned irrevocably hereby elects to exercise ___________ Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or Common Shares or such other securities of
the Company or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the name
of and delivered to:
Please insert social security
or other taxpayer identification number________________________________
_______________________________________________________________________
(Please print name and address)
_______________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other taxpayer identification number________________________________
_______________________________________________________________________
(Please print name and address)
_______________________________________________________________________
Dated:__________________________ __________________________________________
Signature
SIGNATURE GUARANTEED
MEDALLION GUARANTEED*
________________________________
Authorized Signature
*The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange
Medallion Program ("SEMP") or New York Stock Exchange, Inc. Medallion Signature
Program ("MSP").
7
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(3) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person, an Adverse Person or an Affiliate or Associate of
any such Person (as such terms are defined pursuant to the Rights
Agreement); and
(4) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of
any such Person.
Date:_____________________________ ______________________________________
Signature
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
__________________________________
Authorized Signature
NOTICES
-------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Adverse
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and such Assignment or Election to Purchase will not be honored.
8
