EXHIBIT 4.1
RIGHTS AGREEMENT
BETWEEN
THORATEC CORPORATION
AND
COMPUTERSHARE TRUST COMPANY, INC.
AS RIGHTS AGENT
DATED AS OF MAY 2, 2002
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (the "AGREEMENT") is made as of May 2, 2002 by and
between Thoratec Corporation, a California corporation (the "CORPORATION"), and
Computershare Trust Company, Inc. a Colorado corporation (the "RIGHTS AGENT").
B A C K G R O U N D
The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "RIGHT") for each share of
Common Stock (as hereinafter defined) of the Corporation outstanding at the
Close of Business (as hereinafter defined) on May 17, 2002 (the "RECORD DATE").
Each Right originally is a right to purchase one one-thousandth (1/1000th) of a
share of Preferred Stock (as hereinafter defined) upon the terms and subject to
the conditions herein set forth. The Board of Directors has further authorized
and directed the issuance of one Right with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
those terms are hereinafter defined) or as provided in Section 22 of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS
For purposes of this Agreement, these terms have these meanings:
1.1. "ACQUIRING PERSON" means any Person who or which, together
with all Affiliates and Associates of that Person, without the prior approval of
the Board, shall be the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock (other than as a result of a Permitted Offer) or was such
a Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock. Notwithstanding the foregoing, the term "Acquiring
Person" shall not include (i) the Corporation, (ii) any Subsidiary of the
Corporation, (iii) any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation, (iv) any Person organized, appointed or
established by the Corporation or any Subsidiary of the Corporation for or
pursuant to the terms of any such plan, or (v) any Person who or which, together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 15% or more of the then outstanding shares of Common Stock as a result of the
acquisition of shares of Common Stock directly from the Corporation. Further, no
Person shall be an "Acquiring Person" either (i) as a result of the acquisition
of Common Stock by the Corporation which, by reducing the
1
number of shares of Common Stock outstanding, increases the proportional number
of shares beneficially owned by such Person together with all Affiliates and
Associates of such Person; provided, however, that if (1) a Person would become
an Acquiring Person (but for the operation of this sentence), as a result of the
acquisition of shares of Common Stock by the Corporation, and (2) after such
share acquisition by the Corporation, such Person, or an Affiliate or Associate
of such Person, becomes the Beneficial Owner of any additional shares of Common
Stock, then such Person shall be deemed an Acquiring Person, or (ii) if (1)
within eight days after such Person would otherwise have become an Acquiring
Person (but for the operation of this sentence), such Person notifies the Board
that such Person did so inadvertently and (2) within two Business Days (as
defined in Section 1.9 hereof) after such notification, such Person is the
Beneficial Owner of less than 15% of the outstanding shares of Common Stock.
1.2. "ACT" means the Securities Act of 1933, as amended.
1.3. "ADJUSTED NUMBER OF SHARES" and "ADJUSTED PURCHASE PRICE"
have the meanings set forth in Section 11.1.3 hereof.
1.4. "ADJUSTMENT SHARES" has the meaning set forth in Section
11.1.2 hereof.
1.5. "AFFILIATE" and "ASSOCIATE" have the meanings ascribed to
them in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
1.6. "CURRENT PER SHARE MARKET PRICE" has the meaning set forth
in Section 11.4.1 hereof when used with respect to a "Security" (as defined in
Section 11.4.1) and the meaning set forth in Section 11.4.2 hereof when used
with respect to the Preferred Stock.
1.7. A Person is the "BENEFICIAL OWNER" of and "BENEFICIALLY
OWNS" any securities which: (A) that Person or any of that Person's Affiliates
or Associates beneficially owns, directly or indirectly; (B) that Person or any
of that Person's Affiliates or Associates has (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of that Person or any of that
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (ii) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to that Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations adopted under the Exchange Act and (2) is
2
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (C) 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 relating to the acquisition, holding,
voting (except to the extent contemplated by the proviso to subclause (ii) of
this Section 1.7(B)), or disposing of any securities of the Corporation.
Notwithstanding anything in this Section 1.7 to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial Ownership of
securities of the Corporation, means the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which that Person would be deemed to own beneficially
hereunder. Notwithstanding anything in this Section 1.7 to the contrary, no
Person shall be deemed to beneficially own any securities solely by reason of
that Person being a party to a customary agreement pursuant to which that Person
acts or agrees to act as an underwriter with respect to a bona fide public
offering of securities. No decision reached or action taken by the Board or any
committee thereof shall cause any Person (or any Affiliate or Associate of that
Person) who is a member of the Board or such committee to be deemed, for the
purposes of this Agreement, to be a Beneficial Owner of any securities
beneficially owned by any other Person (or any Affiliate or Associate of such
other Person) who is a member of the Board or any committee thereof solely by
reason of such membership on the Board or any committee thereof or participation
in any decision or action thereof on the part of either or both of such Persons.
1.8. "BOARD" means the Corporation's Board of Directors.
1.9. "BUSINESS DAY" means any day other than a Saturday, a
Sunday, a day on which banking institutions in the State of New York are
obligated by law or executive order to close, or a United States federal
holiday.
1.10. "CAPITAL STOCK EQUIVALENTS" has the meaning set forth in
Section 11.1.3 hereof.
1.11. "CLOSE OF BUSINESS" on any given day means 5:00 P.M.,
California time, on that day; provided, however, that if that day is not a
Business Day, "Close of Business" means 5:00 P.M., California time, on the next
succeeding Business Day.
1.12. "COMMON STOCK" when used with reference to the Corporation
means the Common Stock of the Corporation or, in the event of a subdivision,
combination or consolidation with respect to such shares of Common Stock, the
shares of Common Stock resulting from such subdivision, combination or
consolidation. "Common Stock" when used with reference to any Person other than
the Corporation means the capital stock (or equity interests) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons that ultimately control the
first-mentioned Person.
3
1.13. "CORPORATION" means Thoratec Corporation, a California
corporation, and also means a Principal Party to the extent provided in Section
13.1 hereof.
1.14. "DISTRIBUTION DATE" has the meaning set forth in Section
3.1 hereof.
1.15. "EQUIVALENT PREFERRED STOCK" has the meaning set forth in
Section 11.2 hereof.
1.16. "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
1.17. "EXCHANGE RATIO" has the meaning set forth in Section 26.1
hereof.
1.18. "FINAL EXPIRATION DATE" has the meaning set forth in
Section 7.1 hereof.
1.19. "INTERESTED SHAREHOLDER" means any Acquiring Person or any
Affiliate or Associate of an Acquiring Person, or any other Person acting
directly or indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
1.20. "NASDAQ" has the meaning set forth in Section 11.4.1
hereof.
1.21. "PERMITTED OFFER" means a tender or exchange offer which is
for all the outstanding shares of Common Stock of the Corporation at a price and
on terms determined, before the purchase of shares under such tender or exchange
offer, by at least a majority of the members of the Board who are not officers
of the Corporation and who are not Acquiring Persons or Affiliates, Associates,
nominees or representatives of an Acquiring Person, to be adequate (taking into
account all factors that such directors deem pertinent including, without
limitation, prices that could reasonably be achieved if the Corporation or its
assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interests of the Corporation, its shareholders (other than
the Person or any Affiliate or Associate thereof on whose basis the offer is
being made) and other relevant constituencies, taking into account all factors
that such directors may deem pertinent.
1.22. "PERSON" means any individual, firm, partnership,
corporation, limited liability company, limited liability partnership, trust,
association, joint venture or other entity, and includes any successor (by
merger or otherwise) of any such entity.
1.23. "PREFERRED STOCK" means shares of the Corporation's Series
RP Preferred Stock, no par value, having the relative rights, preferences and
limitations set forth in the Form of
4
Certificate of Determination of Series RP Preferred Stock attached to this
Agreement as Exhibit A.
1.24. "PRINCIPAL PARTY" has the meaning set forth in Section 13.2
hereof.
1.25. "PRORATION FACTOR" has the meaning set forth in Section
11.1.3 hereof.
1.26. "PURCHASE PRICE" has the meaning set forth in Section 4.1
hereof.
1.27. "RECORD DATE" has the meaning set forth in the preamble to
this Agreement.
1.28. "REDEMPTION DATE" has the meaning set forth in Section 7.1
hereof.
1.29. "REDEMPTION PRICE" has the meaning set forth in Section
23.1.1 hereof.
1.30. "RIGHT CERTIFICATE" has the meaning set forth in Section
3.1 hereof.
1.31. "RIGHTS" has the meaning set forth in the preamble to this
Agreement.
1.32. "RIGHTS AGENT" means Computershare Trust Company, Inc., a
Colorado corporation, as Rights Agent hereunder, and, from the time of its
succession, any successor Rights Agent selected pursuant to Section 19 or
Section 21 hereof.
1.33. "SECTION 11.1.2 EVENT" has the meaning set forth in Section
11.1.2 hereof.
1.34. "SECTION 13 EVENT" means any event described in clause (A),
(B) or (C) of Section 13.1 hereof.
1.35. "SHARES ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Corporation or
an Acquiring Person that an Acquiring Person has become such or that facts exist
as a result of which there exists an Acquiring Person; provided, however, that,
if such Person is determined by the Board not to have become an Acquiring Person
pursuant to clause (ii) of the second sentence of Section 1.1 hereof, then no
Shares Acquisition Date shall be deemed to have occurred.
5
1.36. "SUBSIDIARY" of any Person means any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
1.37. "SUMMARY OF RIGHTS" has the meaning set forth in Section
3.2 hereof.
1.38. "TRADING DAY" has the meaning set forth in Section 11.4.1
hereof.
1.39. "TRIGGERING EVENT" means any Section 11.1.2 Event or any
Section 13 Event.
1.40. The term "VOTING SECURITIES" has the meaning set forth in
Section 13.1 hereof.
2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby appoints the
Rights Agent to act as agent for the Corporation in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such co-Rights Agent.
3. ISSUANCE OF RIGHT CERTIFICATES
3.1. Until the earlier of (A) the Shares Acquisition Date or (B)
the Close of Business on the tenth day (or such later date as may be determined
by action of the Board) after the date of the commencement by any Person (other
than the Corporation, any Subsidiary of the Corporation, any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation or any Person
organized, appointed or established by the Corporation or any Subsidiary of the
Corporation for or pursuant to the terms of any such plan) of, or after the date
of the first public announcement of the intention of any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person organized,
appointed or established by the Corporation or any Subsidiary of the Corporation
for or pursuant to the terms of any such plan) to commence (which intention to
commence remains in effect for at least five Business Days after such
announcement), a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the case of both (A)
and (B), any such date which is after the date of this Agreement and before the
issuance of the Rights) (the "DISTRIBUTION DATE"), (i) the Rights will be
evidenced (subject to Section 3.2 hereof) by the certificates for shares of
Common Stock registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates,
6
and (ii) the right to receive Right Certificates will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
a transfer to the Corporation); provided, however, that if a tender or exchange
offer is terminated before the occurrence of a Distribution Date, then no
Distribution Date shall occur as a result of such tender or exchange offer. As
soon as practicable after the Distribution Date, the Corporation will prepare
and execute, the Rights Agent will countersign, and the Corporation will send or
cause to be sent by first-class, postage-prepaid mail, to each record holder of
shares of Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Corporation, a Right
Certificate, substantially in the form of Exhibit B hereto (a "RIGHT
CERTIFICATE"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2. As promptly as practicable after the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form of Exhibit C hereto (the "SUMMARY OF RIGHTS"), by
first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Corporation. With respect to certificates for
shares of Common Stock outstanding as of the Record Date, until the Distribution
Date the Rights will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of any certificate for
shares of Common Stock outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
3.3. Certificates for shares of Common Stock that become
outstanding (including, without limitation, reacquired shares of Common Stock
referred to in the last sentence of this Section 3.3) after the Record Date but
before the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, shall be deemed also to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between
Thoratec Corporation and Computershare Trust Company, Inc., as
Rights Agent, dated as of May 2, 2002 (the "AGREEMENT"), the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of
Thoratec Corporation. Under certain circumstances, as set forth
in the Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Thoratec Corporation will mail to the holder of this certificate
a copy of the Agreement without charge after receipt of a written
request therefor. Under certain circumstances set forth in the
Agreement, Rights issued to, or held by, any person who is, was
or becomes an
7
Acquiring Person or an Affiliate or Associate thereof (as defined
in the Agreement) and certain related persons, whether currently
held by or on behalf of such person or by any subsequent holder,
may become null and void.
With respect to certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
thereby. If the Corporation purchases or acquires any shares of Common Stock
after the Record Date but before the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), any Rights associated with such
shares of Common Stock shall be deemed cancelled and retired so that the
Corporation shall not be entitled to exercise any Rights associated with the
Common Stock that are no longer outstanding.
4. FORM OF RIGHT CERTIFICATE
4.1. The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate (which may not affect
the duties and responsibilities of the Rights Agent) and as are not inconsistent
with this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to Section 11 and Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as shall be set forth
therein at the price per one one-thousandth (1/1000th) of a share of Preferred
Stock set forth therein in accordance with Section 7.2 hereof (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.
4.2. Any Right Certificate issued pursuant to Section 3.1 or
Section 22 hereof that represents Rights that are null and void pursuant to
Section 7.6 of this Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and upon notice by the Corporation to the Rights
Agent that this Section 4.2 has become applicable) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
8
those terms are defined in the Agreement). Accordingly, this
Right Certificate and the Rights represented hereby are null and
void.
Section 7.6 of this Agreement shall be operative whether or not the foregoing
legend is contained on any such Right Certificate.
5. COUNTERSIGNATURE AND REGISTRATION
5.1. The Right Certificates shall be executed on behalf of the
Corporation by its President or any Vice President and the Secretary or an
Assistant Secretary, either manually or by facsimile signature, and shall be
attested by the Secretary or an Assistant Secretary of the Corporation, either
manually or by facsimile signature. The Right Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Corporation who shall have signed any of the Right Certificates
ceases to be such officer of the Corporation before countersignature by the
Rights Agent and issuance and delivery by the Corporation, such Right
Certificates may nevertheless be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be such officer of
the Corporation. Any Right Certificate may be signed on behalf of the
Corporation by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Agreement that Person
was not such an officer.
5.2. After the Distribution Date and receipt by the Rights Agent
of a list of record holders of Rights, the Rights Agent will keep or cause to be
kept, at its office designated pursuant to Section 25 hereof as the appropriate
place for surrender or transfer of the Right Certificates, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on the face of each Right
Certificate and the certificate number and the date of each Right Certificate.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES
6.1. Subject to Section 4.2, Section 7.6 and Section 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
before the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths (1/1000ths) of a share of Preferred Stock (or, after the
occurrence of a Triggering Event, other securities, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase.
9
Any registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Corporation shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate 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
Corporation or the Rights Agent shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4.2, Section 7.6 and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Corporation may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates. The Rights Agent may in its sole discretion
require the Corporation or the Person entitled to such Right Certificate to
provide evidence that such payment has been made before countersigning and
delivering any Right Certificate pursuant to this Section 6.1 and shall have no
duty or obligation under this Section 6 unless and until it is satisfied that
all such taxes and charges have been paid.
6.2. Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and, at the Corporation's
request, reimbursement to the Corporation and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Corporation will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS
7.1. Subject to Section 7.6 hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the total Purchase Price for the total number of one
one-thousandths (1/1000ths) of a share of Preferred Stock (or other securities,
as the case may be) as to which such surrendered Rights are exercised, at or
before the earlier of (A) the Close of Business on May 2, 2012 (the "FINAL
EXPIRATION DATE"), or (B) the time at which the Rights are redeemed as provided
in Section 23 hereof (the "REDEMPTION DATE").
10
7.2. The Purchase Price for each one one-thousandth (1/1000th) of
a share of Preferred Stock pursuant to the exercise of a Right shall initially
be $70.00, shall be subject to adjustment from time to time as provided in the
next sentence and in Sections 11 and 13.1 hereof, and shall be payable in
accordance with Section 7.3 hereof. Anything in this Agreement to the contrary
notwithstanding, if at any time after the date of this Agreement and before the
Distribution Date, the Corporation shall (A) declare or pay any dividend on the
Common Stock payable in Common Stock or (B) effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in any such case, each share of Common Stock
outstanding after such subdivision, combination or consolidation shall continue
to have a Right associated therewith and the Purchase Price after the occurrence
of any such event shall be proportionately adjusted to equal the result obtained
by multiplying the Purchase Price immediately before such event by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately before the occurrence of the event, and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately after the occurrence of the event. The adjustment provided for in
the preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
7.3. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the reverse
side thereof duly and properly executed, accompanied by payment of the Purchase
Price for the Preferred Stock (or other securities, as the case may be) to be
purchased and an amount equal to any applicable tax or governmental charge
required to be paid by the holder of such Right Certificate in accordance with
Section 6 hereof by certified check, cashier's check or money order payable to
the order of the Corporation, the Rights Agent shall thereupon promptly (A) (i)
requisition from any transfer agent of the Preferred Stock certificates for the
number of shares of Preferred Stock to be purchased, and the Corporation hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(ii) if the Corporation, in its sole discretion, shall have elected to deposit
the Preferred Stock issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths (1/1000ths) of a share of
Preferred Stock as are to be purchased (in which case certificates for the
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Corporation will direct the depositary
agent to comply with such requests, (B) when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of the issuance of fractional
shares in accordance with Section 14 hereof, (C) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (D) when appropriate,
after receipt thereof, deliver such cash to or upon the order of the registered
holder of such Right Certificate. If the Corporation is obligated to issue other
securities (including shares of Common Stock) of the Corporation pursuant to
Section 11.1 hereof, the Corporation will make all arrangements necessary so
that such other securities are available for distribution by the Rights Agent,
if and when necessary to comply with this Agreement.
11
7.4. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11.1.2 hereof, the Rights Agent shall return such
Right Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the Rights represented by such Right
Certificate no longer include the rights provided by Section 11.1.2 of this
Agreement and if less than all the Rights represented by such Right Certificate
were so exercised, the Rights Agent shall indicate on the Right Certificate the
number of Rights represented thereby that continue to include the rights
provided by Section 11.1.2.
7.5. In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to the
holder's duly authorized assigns, subject to Section 6 and Section 14 hereof, or
the Rights Agent shall place an appropriate notation on the Right Certificate
with respect to those Rights exercised.
7.6. Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11.1.2 Event, any Rights
beneficially owned by (A) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (B) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) who becomes a transferee after the Acquiring Person
becomes such, or (C) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee before or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (i) a
transfer (whether or not for consideration) from the Acquiring Person (or from
any Affiliate or Associate thereof) to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the transferred
Rights or (ii) a transfer that the Board has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7.6, shall become null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under this Agreement or otherwise. The
Corporation shall notify the Rights Agent when this Section 7.6 applies and
shall use all reasonable efforts to cause this Section 7.6 and Section 4.2
hereof to be complied with, but neither the Corporation nor the Rights Agent
shall have any liability to any holder of Right Certificates or other Person as
a result of the Corporation's failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder.
7.7. Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(A) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (B) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation or the Rights Agent shall reasonably
request.
12
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by this Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation otherwise
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Corporation, or shall, at the written request of the
Corporation, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Corporation.
9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK
9.1. At all times before the occurrence of a Section 11.1.2
Event, the Corporation shall cause to be reserved and kept available out of its
authorized and unissued Preferred Stock, the number of shares of Preferred Stock
that will be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Section 11.1.2 Event, shall, to the extent
reasonably practicable, so reserve and keep available out of its authorized and
unissued shares of Common Stock (or other securities, as appropriate), a
sufficient number of shares of Common Stock (or other securities, as
appropriate) that may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
9.2. So long as the shares of Preferred Stock (and, after the
occurrence of a Section 11.1.2 Event, shares of Common Stock or any other
securities) issuable upon the exercise of the Rights may be listed on any stock
exchange, the Corporation shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares or other securities
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
9.3. The Corporation shall take all such actions as may be
necessary to ensure that all shares of Preferred Stock (or shares of Common
Stock or other securities, as the case may be) 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), be duly and validly
authorized and issued and fully paid and non-assessable shares or securities.
9.4. The Corporation shall pay when due and payable any and all
taxes and governmental charges that may be payable in respect of the issuance or
related delivery of the Right Certificates or of any shares of Preferred Stock
(or shares of Common Stock or other securities, as the case may be) upon the
exercise of Rights. The Corporation shall not, however, be required to pay any
tax or governmental charge that may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates
13
or depositary receipts for the shares of Preferred Stock (or shares of Common
Stock or other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or depositary receipts for
shares of Preferred Stock (or shares of Common Stock or other securities, as the
case may be) upon the exercise of any Rights, until any such tax or governmental
charge shall have been paid (any such tax or governmental charge being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Corporation's reasonable satisfaction that no such
tax or governmental charge is due.
9.5. The Corporation shall use its best efforts to (A) file, as
soon as practicable after the Shares Acquisition Date, a registration statement
under the Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (B) cause such registration statement to become
effective as soon as practicable after such filing, and (C) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the period for exercise of the Rights
provided by Section 11.1.2. The Corporation shall also take such action as may
be appropriate under the blue sky laws of the various states.
10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock (or shares of Common Stock or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock (or shares of Common Stock or other securities, as the case may
be) represented thereby on, and such certificate shall be dated the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes and governmental
charges) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the shares of Preferred Stock (or shares of Common
Stock or other securities, as the case may be) transfer books of the Corporation
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the shares of Preferred Stock (or shares of Common Stock or other
securities, as the case may be) transfer books of the Corporation are open.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER
OF RIGHT
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
11.1. ADJUSTMENT EVENTS
11.1.1. If the Corporation shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number
14
of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), except as otherwise provided in this
Section 11.1 and Section 7.6 hereof, the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
total number and kind of shares of capital stock that, if such Right had been
exercised immediately before such date and at a time when the Preferred Stock
transfer books of the Corporation were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the total par value, if any, of the shares of capital stock of the
Corporation issuable upon exercise of one Right. If an event occurs that would
require an adjustment under both Section 11.1.1 and Section 11.1.2, the
adjustment provided for in this Section 11.1.1 shall be in addition to, and
shall be made before, any adjustment required pursuant to Section 11.1.2.
11.1.2. In the event (a "SECTION 11.1.2 EVENT") that any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then the Corporation shall make proper provision so that each
holder of a Right (except as provided below and in Section 7.6 hereof) shall,
for a period of 60 days (or such longer period as the Board may determine at any
time before or during such 60-day period after the later of the occurrence of
any such event or the effective date of an appropriate registration statement
under the Act pursuant to Section 9.5 hereof, have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price, in
accordance with this Agreement, such number of shares of Common Stock (or, in
the discretion of the Board, the number of one one-thousandths (1/1000ths) of a
share of Preferred Stock) as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the then number of one one-thousandths
(1/1000ths) of a share of Preferred Stock for which a Right was exercisable
immediately before the first occurrence of the Section 11.1.2 Event, and (B)
dividing that product by 50% of the then current per share market price of the
Common Stock (determined pursuant to Section 11.4 hereof) on the date of such
first occurrence (such number of shares being referred to as the "ADJUSTMENT
SHARES"); provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to Section 13 hereof, then only
Section 13 hereof shall apply and no adjustment shall be made pursuant to this
Section 11.1.2.
11.1.3. If there shall not be sufficient authorized but
unissued (and unreserved) Common Stock to permit the exercise in full of the
Rights in accordance with Section 11.1.2 and the Rights become so exercisable
(and the Board has not determined to make the Rights exercisable solely into
fractions of a share of Preferred Stock), notwithstanding any other provision of
this Agreement, to the extent necessary and permitted by applicable law, each
Right (except as provided below and in Section 7.6 hereof) shall thereafter
represent the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with this Agreement, (A) a number of (or fractions
of) shares of Common Stock calculated by dividing the
15
maximum number of shares of Common Stock that may permissibly be issued by the
number of outstanding Rights and (B) a number of one one-thousandths (1/1000ths)
of shares of Preferred Stock or a number of, or fractions of, other equity
securities of the Corporation (or, in the discretion of the Board, debt) that
the Board has determined to have a total current market value (determined
pursuant to Section 11.1.1 and Section 11.1.2 hereof, to the extent applicable)
equal to the difference between (i) the total current market value of the
Adjustment Shares (assuming such shares of Common Stock could be issued pursuant
to Section 11.1.2 hereof) and (ii) the total current market value of the shares
of Common Stock issued in respect of such Right pursuant to the preceding clause
(A) (such number of, or fractions of, shares of Preferred Stock, debt or other
equity securities or debt of the Corporation being referred to as a "CAPITAL
STOCK EQUIVALENT"); provided, however, that if a sufficient number of shares of
Common Stock or Capital Stock Equivalents are unavailable, then the Corporation
shall, to the extent permitted by applicable law, take all such action as may be
necessary to authorize additional shares of Common Stock or Capital Stock
Equivalents for issuance upon exercise of the Rights, including the calling of a
meeting of shareholders; and provided, further, that if the Corporation is
unable to cause sufficient shares of Common Stock or Capital Stock Equivalents
to be available for issuance upon exercise in full of the Rights, then each
Right shall thereafter represent the right to receive the Adjusted Number of
Shares upon exercise at the Adjusted Purchase Price. "ADJUSTED NUMBER OF SHARES"
shall mean that number of (or fractions of) shares of Common Stock (or Capital
Stock Equivalents) equal to the product of (x) the number of Adjustment Shares
and (y) a fraction, the numerator of which is the number of shares of Common
Stock (or Capital Stock Equivalents) available for issuance upon exercise of the
Rights, and the denominator of which is the total number of Adjustment Shares
otherwise issuable upon exercise in full of all Rights (assuming there were a
sufficient number of shares of Common Stock available) (such fraction being
referred to as the "PRORATION FACTOR"). "ADJUSTED PURCHASE PRICE" means the
product of the Purchase Price and the Proration Factor. The Board may, but shall
not be required to, establish procedures to allocate the right to receive shares
of Common Stock and Capital Stock Equivalents upon exercise of the Rights among
holders of Rights.
11.2. If the Corporation fixes a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase shares of Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock
("EQUIVALENT PREFERRED STOCK")) or securities convertible into Preferred Stock
or Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred
Stock) less than the then current per share market price of the Preferred Stock
(as determined pursuant to Section 11.4 hereof) 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 before such record date by
a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock that the total offering price of the total number of shares of Preferred
Stock or Equivalent Preferred Stock so to be offered (or the total initial
conversion price of the convertible securities so to be offered) would purchase
at such current per share market price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date plus the
16
number of additional shares of Preferred Stock or Equivalent Preferred Stock 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 total par value, if any, of the shares of capital stock of the
Corporation issuable upon exercise of one Right. In case such subscription price
may be paid in a consideration, part or all of which shall be in a form other
than cash, the value of such consideration shall be determined in good faith by
the Board. The Board's 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 Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed. If such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
11.3. If the Corporation fixes a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11.2 hereof), the Purchase Price in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately before such record date by a fraction, the numerator
of which shall be the then current per share market price (as determined
pursuant to Section 11.4 hereof) of the Preferred Stock 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 holders of the Rights) of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one share of Preferred Stock,
and the denominator of which shall be such current per share market price of the
Preferred Stock; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the total par value, if any,
of the shares of capital stock of the Corporation to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever such a record
date is fixed. If the distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.
11.4. COMPUTATION OF CURRENT PER SHARE MARKET PRICE
11.4.1. For the purpose of any computation hereunder, the
"CURRENT PER SHARE MARKET PRICE" of any security (a "SECURITY" for the purpose
of this Section 11.4.1) on any date shall be the average of the daily closing
prices per share of such Security for the 30 consecutive Trading Days
immediately before and not including such date; provided, however, that, if the
current per share market price of the Security is determined during a period
after the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any
17
subdivision, combination or reclassification of such Security and before the
expiration of 30 Trading Days after (but not including) the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, on the National Association of Securities Dealers,
Inc. Automated Quotations ("NASDAQ") National Market System, or, in case the
Security is listed on the NASDAQ National Market System but no such sale takes
place on that day, the last sale price on the NASDAQ National Market System on
the last day such a sale took place or if, on any such day, the Security is not
listed on the NASDAQ National Market System, the last sale price, regular way,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by ("NASDAQ") or, if on any
such the Security is not traded in the over-the-counter market, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board. If, on any such date, no
such market maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board shall be used.
"TRADING DAY" means a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
11.4.2. For the purpose of any computation hereunder, the
"CURRENT PER SHARE MARKET PRICE" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11.4.1 hereof. If the shares of
Preferred Stock are not publicly traded, the "CURRENT PER SHARE MARKET PRICE" of
the Preferred Stock shall be the current per share market price of the Common
Stock as determined pursuant to Section 11.4.1 (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by 1,000. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "CURRENT PER SHARE
MARKET PRICE" shall mean, with respect to the Preferred Stock, the fair value
per share as determined in good faith by the Board. That 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.
11.5. Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments that by reason of this Section 11.5 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 one one-thousandth (1/1000th) of a share of
Preferred Stock or of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11.5, any adjustment required
by this Section 11 shall be made no later than the earlier of (A) three years
from the date of the transaction that mandates such adjustment or (B) the Final
Expiration Date.
18
11.6. If, as a result of an adjustment made pursuant to Section
11.1.2 or Section 13.1 hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Corporation
other than Preferred Stock, thereafter the number of other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Section 11.1 through 11.3,
inclusive, and Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply on like terms to any such other shares.
11.7. All Rights originally issued by the Corporation subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-thousandths
(1/1000ths) of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8. 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 one one-thousandths (1/1000ths) of a share of Preferred Stock
purchasable upon the exercise of a Right. Each Right outstanding after any such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock for which a Right was
exercisable immediately before such adjustment. Each Right held of record before
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately before the adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Corporation shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made, and shall deliver a copy of
such public announcement to the Rights Agent. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11.8, the
Corporation shall, as promptly as practicable, cause to be distributed, to the
holders of record of Right Certificates on such record date, Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the Corporation, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
before the date of adjustment, and upon surrender thereof, if required by the
Corporation, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
19
11.9. Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths (1/1000ths) of a share of Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price and
the number of one one-thousandths (1/1000ths) of a share of Preferred Stock that
were expressed in the initial Right Certificates issued hereunder.
11.10. Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number of
one one-thousandths (1/1000ths) of a share of Preferred Stock, share of Common
Stock or other securities issuable upon exercise of the Rights, the Corporation
shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue such
number of fully paid and non-assessable one one-thousandths (1/1000ths) of a
share of Preferred Stock, share of Common Stock or other securities at such
adjusted Purchase Price.
11.11. 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 Corporation may elect to defer, until the occurrence of
such event, the issuance to the holder of any Right exercised after such record
date of the Preferred Stock, shares of Common Stock or other securities of the
Corporation, if any, issuable upon such exercise over and above the Preferred
Stock, shares of Common Stock or other securities of the Corporation, if any,
issuable upon such exercise on the basis of the Purchase Price in effect before
such adjustment; provided, however, that the Corporation shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment and shall deliver to the Rights Agent a notice describing the
terms of such due xxxx or other appropriate instrument.
11.12. Anything in this Section 11 to the contrary
notwithstanding, the Corporation 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 the Board in its sole discretion shall
determine to be advisable in order that any (A) consolidation or subdivision of
the Preferred Stock, (B) issuance wholly for cash of Preferred Stock at less
than the current market price, (C) issuance wholly for cash of Preferred Stock
or securities that by their terms are convertible into or exchangeable for
Preferred Stock, (D) stock dividends or (E) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Corporation to
holders of its Preferred Stock shall not be taxable to such holders.
11.13. The Corporation shall not, at any time after the
Distribution Date, (A) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction that does not violate Section
11.14 hereof), (B) merge with or into any other Person (other than a Subsidiary
of the Corporation in a transaction that does not violate Section 11.14 hereof),
or (C) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
totaling more than 50% of the assets or earning
20
power of the Corporation and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Corporation and/or any of its Subsidiaries in
one or more transactions each of which does not violate Section 11.14 hereof),
if (i) at the time of or immediately after such consolidation, merger, sale or
transfer, there are any charter or bylaw provisions or any rights, warrants or
other instruments or securities outstanding or agreements in effect or other
actions taken that would materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (ii) before, 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 13.1 hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates. The
Corporation shall not complete any such consolidation, merger, sale or transfer
unless, prior thereto, the Corporation and such other Person shall have executed
and delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11.13.
11.14. After the Distribution Date, the Corporation shall not,
except as permitted by Section 23 or Section 25.2 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to, or if at the time
such action is taken it is reasonably foreseeable that the effect of such action
will be to, materially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
11.15. The exercise of Rights under Section 11.1.2 hereof shall
only result in the loss of rights under Section 11.1.2 to the extent so
exercised and shall not otherwise affect the rights represented by the Rights
under this Agreement, including the rights represented by Section 13 hereof.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Corporation shall promptly (A) prepare a certificate setting forth such
adjustment and a brief, reasonably detailed statement of the facts, computations
and methodology accounting for such adjustment, (B) file with the Rights Agent
and with each transfer agent for the Common Stock and the Preferred Stock a copy
of such certificate and (C) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25.1 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall have no duty with respect to, and shall not be
deemed to have knowledge of, such adjustment unless and until it shall have
received such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER
13.1. If, on or after the Shares Acquisition Date, directly or
indirectly, (A) the Corporation shall consolidate with, or merge with and into,
any Interested Shareholder or, if in such merger or consolidation all holders of
shares of Common Stock are not treated alike, any other Person, (B) the
Corporation shall consolidate with, or merge with, any Interested
21
Shareholder or, if in such merger or consolidation all holders of shares of
Common Stock are not treated alike, any other Person, and the Corporation shall
be the continuing or surviving corporation of such consolidation or merger
(other than, in a case of any transaction described in (A) or (B), a merger or
consolation that would result in all of the securities generally entitled to
vote in the election of directors of the Corporation ("VOTING SECURITIES")
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Corporation or such voting surviving
entity outstanding immediately after such merger or consolidation and the
holders of such securities not having changed as a result of such merger or
consolidation), or (C) the Corporation 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
totaling more than 50% of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any Interested Shareholder or Shareholders
or, if in such transaction (including any subsequent liquidating distribution or
distributions) all holders of Common Stock are not treated alike, any other
Person (other than the Corporation or any Subsidiary of the Corporation in one
or more transactions each of which does not violate Section 11.14 hereof), then,
and in each such case (except as provided in Section 13.4 hereof), the
Corporation shall make proper provision so that (i) each holder of a Right,
except as provided in Section 7.6 hereof, shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price, in accordance with this Agreement and in lieu of Preferred Stock, such
number of freely tradable shares of Common Stock of the Principal Party, not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section 11.1.2) and dividing
that product by (2) 50% of the then current per share market price of the Common
Stock of such Principal Party (determined pursuant to Section 11.4 hereof) on
the date of completion of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Corporation pursuant to this Agreement;
(iii) the term "Corporation" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that Section 11 hereof shall
apply only to such Principal Party after the first occurrence of a Section 13
Event and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its shares of Common
Stock) in connection with the completion 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 the shares of Common Stock
thereafter deliverable upon the exercise of the Rights.
13.2. "PRINCIPAL PARTY" means:
13.2.1. in the case of any transaction described in clause
(A) or (B) of the first sentence of Section 13.1 hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Corporation
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
(including, if applicable, the Corporation if it is the surviving corporation)
and
22
13.2.2. in the case of any transaction described in clause
(C) of the first sentence of Section 13.1 hereof, 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 of
the foregoing cases, (A) if the Common Stock of such Person is not at such time
and has 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 shares of Common Stock of which are and have
been so registered, "Principal Party" shall refer to such other Person; (B) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the shares of Common Stock 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 Stock having the greatest total market value and (C) in
case such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (A) and (B) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers and the Principal
Party or Parties in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
13.3. The Corporation shall not complete any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized shares of Common Stock that 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 Corporation and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Sections 13.1 and
13.2 and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in Section 13.1, the Principal
Party at its own expense shall (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 (i) become effective as soon as practicable
after such filing and (ii) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date; (B) use
its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate and (C) deliver to holders of
the Rights historical financial statements for the Principal Party that comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act. This Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 13
shall be in addition to the rights to exercise Rights and adjustments under
Section 11.1.2 and shall survive any exercise thereof.
13.4. Notwithstanding anything in this Agreement to the contrary,
the foregoing provisions of this Section 13 shall not be applicable to a
transaction described in clauses (A) and (B) of Section 13.1 if: (A) such
transaction is completed with a Person or Persons who acquired shares of Common
Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of any such
Person or Persons); (B) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of shares of Common
23
Stock whose shares were purchased pursuant to such Permitted Offer and (C) the
form of consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon completion of any such
transaction contemplated by this Section 13.4, all Rights hereunder shall
expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
14.1. The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such 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 the purposes of this Section 14.1,
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately before the date on which such fractional
Rights would otherwise have been issuable. The closing price for any day shall
be the last sale price for the Rights, regular way, or, in case no such sale
takes place on such day, the last sale price on the last day such a sale took
place, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to which securities listed on the
principal national securities exchange on which Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on a national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board shall be used.
14.2. The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are one one-thousandth
(1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Preferred Stock (other than fractions that are one
one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th)
of a share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-thousandth (1/1000th) of a share of Preferred
Stock may, at the election of the Corporation, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Corporation and a
depositary selected by it; provided, however, that such agreement shall provide
that the holders of such depositary receipts shall have the rights, privileges
and preferences to which they are entitled as beneficial owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not one one-thousandth (1/1000th) or integral multiples
of one one-thousandth (1/1000th) of a share of Preferred Stock, the Corporation
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For the
purposes of this Section 14.2, the current market
24
value of a share of Preferred Stock shall be the closing price of a share of
Preferred Stock (as determined pursuant to Section 11.4.2 hereof) for the
Trading Day immediately before the date of such exercise.
14.3. After the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive shares of
Common Stock, Capital Stock Equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Corporation shall not be required
to issue fractions of shares or units of such shares of Common Stock, Capital
Stock Equivalents or other securities upon exercise of the Rights or to
distribute certificates that evidence fractions of such shares of Common Stock,
Capital Stock Equivalents or other securities. In lieu of fractional shares or
units of such shares of Common Stock, Capital Stock Equivalents or other
securities, the Corporation may pay to the registered holders of Right
Certificates, at the time such Rights are exercised as herein provided, an
amount in cash equal to the same fraction of the current market value of a share
or unit of such shares of Common Stock, Capital Stock Equivalents or other
securities. For purposes of this Section 14.3, the current market value shall be
determined in the manner set forth in Section 11.4 hereof for the Trading Day
immediately before the date of such exercise and, if such Capital Stock
Equivalent is not traded, each such Capital Stock Equivalent shall have the
value of one one-thousandth (1/1000th) of a share of Preferred Stock.
14.4. The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional share upon exercise of a Right (except as provided above). The Rights
Agent shall not be deemed to have knowledge of, and shall have no duty in
respect of, the issuance of fractional Rights or fractional shares unless and
until it shall have received instructions from the Corporation concerning the
issuance of such fractional Rights or fractional shares.
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under this
Agreement, are vested in the respective registered holders of the Right
Certificates (and, before the Distribution Date, the registered holders of
shares of the Common Stock). Any registered holder of any Right Certificate (or,
before the Distribution Date, of shares of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
before the Distribution Date, of shares of the Common Stock), may, in such
registered holder's own behalf and for such registered holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Corporation to enforce, or otherwise act in respect of, such registered
holder's right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement. Nothing in this Section 15 is intended to modify or limit the
authority of the Board under Section 25.3.
25
16. AGREEMENT OF RIGHT HOLDERS
Every holder of a Right, by accepting the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of a Right
that:
16.1. Before the Distribution Date, the Rights will be
transferable only in connection with the transfer of the associated shares of
Common Stock;
16.2. After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
16.3. Subject to Section 6 and Section 7.7 hereof, the
Corporation and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, before the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Stock certificate made by any Person
other than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent, subject to the last sentence of
Section 7.6 hereof, shall be required to be affected by any notice to the
contrary and
16.4. Notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree,
judgment or ruling (whether interlocutory or final) issued by a court or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Corporation shall use its best efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned as soon as
practicable.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of shares of the Preferred Stock or any
other securities of the Corporation that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Corporation 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 24 hereof), or to receive dividends
or other
26
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with this Agreement.
18. CONCERNING THE RIGHTS AGENT
18.1. The Corporation shall pay the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration, preparation, delivery,
amendment and execution of this Agreement and the exercise and performance of
its duties hereunder. The Corporation shall also indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, as
finally determined by a court of competent jurisdiction, for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement including, without limitation, the costs and
expenses of defending against any claim of liability in respect of any such
action. The Corporation shall also pay the costs and expenses of enforcing this
right of indemnification. The indemnity, exculpation and compensation provisions
provided for in this Agreement, including, but not limited to, Sections 18 and
20, shall survive the expiration of the Rights, the termination of this
Agreement, and the resignation or removal of the Rights Agent hereunder.
18.2. The Rights Agent may conclusively rely upon and shall be
authorized and protected and shall incur no liability for, or in respect of, any
action taken, suffered or omitted by it in connection with the acceptance and
administration of this Agreement in reliance upon any Right Certificate or
certificate for shares of Common Stock or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it in good faith to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons. The Rights Agent shall not be deemed to have
knowledge of, and shall have no duty in respect of, any fact contained in such
Right Certificate or certificate for shares of Common Stock or for other
securities of the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document unless and until it shall have
received the same.
18.3. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect, punitive,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of
the likelihood of such loss or damage and regardless of the form of the action.
Any liability of the Rights Agent hereunder will be limited to the amount of
fees paid by the Corporation to the Rights Agent hereunder.
27
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
19.1. 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 all or
substantially all of the shareholder services business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided, however, that such Person
would be eligible for appointment as a successor Rights Agent under Section 21
hereof.
19.2. In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned. In case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name. In all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT
20.1. The Rights Agent undertakes those duties and obligations,
and only those duties and obligations, expressly imposed by this Agreement (and
no implied duties or obligations) upon the following terms and conditions, and
no implied duties or obligations shall be read into this Agreement against the
Rights Agent, by all of which the Corporation and the holders of Right
Certificates, by their acceptance thereof, shall be bound.
20.2. Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for the
Corporation), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent, and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in good faith and in accordance with such advice or opinion.
20.3. Whenever in the performance of its duties under this
Agreement, the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of an Acquiring Person
and the determination of the current market price of any security) be proved or
established by the Corporation before taking, suffering or omitting 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 the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights
28
Agent, and such certificate shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted in good faith by it under this Agreement
in reliance upon such certificate.
20.4. The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct, as finally determined by a
court of competent jurisdiction.
20.5. The Rights Agent shall not be liable for, or by reason of,
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature on such Right Certificates) or
be required to verify the same.
20.6. The Rights Agent shall not have any liability in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof). The
Rights Agent shall not be responsible for any breach by the Corporation of any
of the Corporation's covenants contained in this Agreement or in any Right
Certificate, or any change in the exercisability of the Rights (including the
Rights becoming null and void pursuant to Section 7.6 hereof) or any adjustment
required under Section 11, Section 13 or Section 26 hereof or be responsible for
the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of the
certificate described in Section 12 hereof). The Rights Agent shall not, by any
act hereunder, be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or Common Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Preferred Stock or Common Stock will, when issued, be validly
authorized and issued, fully paid or non-assessable.
20.7. The Corporation shall 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 performance by the Rights
Agent of this Agreement.
20.8. The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President or the Secretary of the Corporation, and to apply
to such officers for advice or instructions in connection with its duties. Such
instructions shall be full authorization and protection of the Rights Agent, and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. The Rights Agent shall incur no liability for or in respect
of its reliance upon the most recent instructions received by any such officer.
Any
29
application by the Rights Agent for written instructions from the Corporation
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent under this Agreement and the date on
or after which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, before taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instruction in response to such application
specifying the action to be taken, suffered or omitted.
20.9. The Rights Agent and any shareholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Corporation or become pecuniarily interested
in any transaction in which the Corporation may be interested, or contract with
or lend money to the Corporation or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Corporation or for any
other Person.
20.10. 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
answerable or accountable for any act, default, negligence or misconduct of any
such attorneys or agents or for any loss to the Corporation or any other Person
resulting from any such act, default, negligence or misconduct, absent gross
negligence, bad faith or willful misconduct, as finally determined by a court of
competent jurisdiction, in the selection and continued employment thereof.
20.11. No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights, if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
20.12. If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the
Corporation.
20.13. The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designee of a
Person as an Acquiring Person, Affiliate or
30
Associate), under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Corporation of such fact, event or
determination.
21. CHANGE OF RIGHTS AGENT
21.1. 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 Corporation and to each transfer agent of the Common Stock
or Preferred Stock by registered or certified mail, and, at the expense of the
Corporation, to the holders of the Right Certificates by first-class mail. The
Corporation may remove the Rights Agent or any successor Rights Agent upon 60
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock or Preferred
Stock by registered or certified mail, and to holders of the Right Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent.
21.2. If the Corporation shall fail to make such appointment
within a period of 60 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 holder of a Right Certificate (who shall,
with such notice, submit the holder's Right Certificate for inspection by the
Corporation), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be (A) a Person organized and doing business under the laws of the
United States or of any of the States of New York, Delaware or California (or of
any other state of the United States, so long as such Person is authorized to do
business in any of the States of New York, Delaware or California), in good
standing, having an office in any of such States, which is subject to
supervision or examination by federal or state authority and which (or the
parent corporation of which) has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000 or (B) an affiliate of
such Person.
21.3. 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; provided,
however, that 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, at the Corporation's sole expense, any further assurance,
conveyance, act or deed necessary for that purpose. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Right Certificates so countersigned and, in case
at that time, any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor or in the
31
name of the successor Rights Agent. In all such cases, such Right Certificates
shall have the full force provided in the Right Certificates and this Agreement.
Not later than the effective date of any such appointment, the Corporation shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock or Preferred Stock, and mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
22. ISSUANCE OF NEW RIGHT CERTIFICATES
22.1. Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Corporation may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved 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
Right Certificates made in accordance with this Agreement.
22.2. In connection with the issuance or sale of Common Stock
after the Distribution Date and before the earlier of the Redemption Date and
the Final Expiration Date, the Corporation (A) shall with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Corporation, and (B)
may in any other case, if deemed necessary or appropriate by the Board, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) the Corporation shall
not be obligated to issue any such Right Certificates if and to the extent the
Corporation shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Corporation or the
Person to whom such Right Certificate would be issued, and (ii) no Right
Certificate shall be issued if and to the extent that appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. REDEMPTION AND TERMINATION
23.1. REDEMPTION
23.1.1. The Board may, at its option, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.0001
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"),
at any time before the earlier of the occurrence of a Section 11.1.2 Event or
the Final Expiration Date. The Corporation may, at its option, pay the
Redemption Price either in shares of
32
Common Stock (based on the current per share market price of the Common Stock at
the time of redemption) or cash; provided, however, that, if the Corporation
elects to pay the Redemption Price in shares of Common Stock, the Corporation
shall not be required to issue any fractional shares of Common Stock and the
number of shares of Common Stock issuable to each holder of Rights shall be
rounded down to the next whole share.
23.1.2. In addition, the Board may, at its option, at any
time after the occurrence of a Section 11.1.2 Event, and the expiration of any
period during which the holder of Rights may exercise the Rights under Section
11.1.2 but before any Section 13 Event, redeem all but not less than all of the
then outstanding Rights at the Redemption Price (A) in connection with any
merger, consolidation or sale or other transfer (in one transaction or in a
series of related transactions) of assets or earning power totaling 50% or more
of the earning power of the Corporation and its Subsidiaries (taken as a whole)
in which all holders of shares of Common Stock are treated alike and not
involving (other than as a holder of shares of Common Stock being treated like
all other such holders) an Interested Shareholder or (B) (i) if and for so long
as the Acquiring Person is not thereafter the Beneficial Owner of 15% or more of
the Common Stock, and (ii) at the time of redemption no other Persons are
Acquiring Persons.
23.2. In the case of a redemption permitted under Section 23.1.1
hereof, immediately upon the date for redemption set forth in (or determined in
the manner specified in) a resolution of the Board ordering the redemption of
the Rights, and without any further action and without any notice, the right to
exercise the Rights will terminate and, thereafter, the only right of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. In the case of a redemption permitted only under Section 23.1.2 hereof,
the right to exercise the Rights will terminate and represent only the right to
receive the Redemption Price upon the later of ten Business Days after the
giving of such notice or the expiration of any period during which the Rights
may be exercised under Section 11.1.2 hereof. The Corporation shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten days after such date for redemption set forth in a
resolution of the Board ordering the redemption of the Rights, the Corporation
shall mail a notice of redemption to the Rights Agent and all the holders of the
then outstanding Rights at (in the case of notice to holders) their addresses as
they appear upon the registry books of the Rights Agent or, before the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Corporation nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any manner
other than as specifically set forth in this Section 23 and other than in
connection with the purchase of shares of Common Stock before the Distribution
Date.
23.3. The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (A) issuing a press release announcing
the manner of redemption of the
33
Rights in accordance with this Agreement and (B) mailing payment of the
Redemption Price to the registered holders of the Rights at their addresses as
they appear on the registry books of the Rights Agent or, before the
Distribution Date, on the registry books of the Transfer Agent of the Common
Stock, and upon such action, all outstanding Rights and Right Certificates shall
be null and void without any further action by the Corporation.
24. NOTICE OF CERTAIN EVENTS
24.1. If the Corporation proposes (A) to pay any dividend payable
in stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
quarterly cash dividend), (B) to offer to the holders of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional Preferred
Stock or shares of stock of any class or any other securities, rights or
options, (C) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding Preferred Stock),
(D) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Corporation in a transaction which does not violate
Section 11.14 hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer) in one or more
transactions, of 50% or more of the assets or earning power of the Corporation
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Corporation and/or any of its Subsidiaries in one or more transactions
each of which does not violate Section 11.14 hereof), or (E) to effect the
liquidation, dissolution or winding up of the Corporation, then, in each such
case, the Corporation shall give the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action. The notice 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 the Preferred Stock, if any such date is to be fixed. Such
notice shall be so given in the case of any action covered by clause (A) or (B)
above at least 20 days before the record date for determining the holders of the
Preferred Stock for purposes of such action, and in the case of any such other
action, at least 20 days before the date of the taking of such proposed action
or the date of participation therein by the holders of the Preferred Stock,
whichever shall be the earlier.
24.2. In case of a Section 11.1.2 Event, (A) the Corporation
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25.1.3 hereof, a notice of the
occurrence of such event. The notice shall describe such event and the
consequences of such event to holders of Rights under Section 11.1.2 hereof, and
(B) all references in the preceding Section 24.1 to Preferred Stock shall be
deemed thereafter to refer also to shares of Common Stock or, if appropriate,
other securities of the Corporation.
34
25. MISCELLANEOUS
25.1. NOTICES
25.1.1. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Corporation shall be sufficiently given or made if sent by
registered or certified mail and shall be deemed given upon receipt, addressed
(until another address is filed in writing with the Rights Agent) as follows:
Thoratec Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
25.1.2. Subject to Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent registered or certified mail and shall be deemed given
upon receipt, addressed (until another address is filed in writing with the
Corporation) as follows:
Computershare Trust Company, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
25.1.3. Notices or demands authorized by this Agreement to
be given or made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if before the Distribution Date, to the holder of
certificates representing shares of Common Stock, 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 Corporation.
25.2. SUPPLEMENTS AND AMENDMENTS. The Corporation may from time
to time supplement or amend any provision of this Agreement without the approval
of any holders of Rights in order to cure any ambiguity, to correct, supplement
or amend any provision herein, or to make any other provision with respect to
the Rights which the Corporation may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Corporation
and the Rights Agent; provided, however, that from and after any Shares
Acquisition Date, this Agreement shall not be amended in any manner which will
adversely affect the interests of the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment
35
is in compliance with the terms of this Section 25.2 and, if requested by the
Rights Agent, an opinion of counsel, the Rights Agent shall execute such
supplement or amendment. Before the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of shares of Common Stock. This Agreement shall not be amended, without the
prior written consent of the Rights Agent, in any manner that changes or
increases the duties, liabilities or obligations of the Rights Agent.
25.3. DETERMINATION AND ACTIONS BY THE BOARD ETC. 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 the
Corporation, or as may be necessary or advisable in the administration of this
Agreement, including without limitation, the right and power to (A) interpret
this Agreement, and (B) make all determinations deemed necessary or advisable
for the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Right Certificates). For all purposes of this Agreement, any calculation of the
number of shares of Common Stock or other securities outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement, or any successor
sentence or rule. 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 Corporation, the Rights Agent,
the holders of the Right Certificates and all other Persons, and (ii) not
subject the Board to any liability to the holders of the Right Certificates or
any other Person. The Rights Agent shall be fully protected and shall incur no
liability for or in respect of its reliance on the good faith of the Board with
respect to actions done or made in connection with such calculation. Nothing in
Section 15 hereof is intended to modify or limit this Section 25.3.
25.4. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
25.5. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Corporation, the Rights Agent
and the registered holders of the Right Certificates (and, before the
Distribution Date, the shares of Common Stock) any legal or equitable right,
remedy or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, before the Distribution Date, the shares
of Common Stock).
36
25.6. SEVERABILITY. If any provision of this Agreement is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the other provisions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated unless, and
then only to the extent that, that is a necessary consequence of that holding.
25.7. GOVERNING LAW. This Agreement, and each Right and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of California and for all purposes shall be governed by
and construed in accordance with the laws of that state applicable to contracts
to be made and performed entirely within that state.
25.8. COUNTERPARTS. This Agreement may be executed in any number
of counterparts. Each counterpart shall for all purposes be deemed to be an
original, and all counterparts shall together constitute one and the same
instrument.
25.9. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
26. EXCHANGE
26.1. Notwithstanding any other provision hereof, the Board may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to Section 7.6
hereof) for shares of Common Stock of the Corporation at an exchange ratio
determined by dividing the then-applicable exercise price of the Rights
determined under Section 7.2 by the "current per share market price" as defined
in Section 11.4.1 (such exchange ratio being hereinafter referred to as the
"EXCHANGE RATIO"). Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of the
Corporation or any such Subsidiary, or any Person organized, appointed or
established by the Corporation for or pursuant to the terms of any such plan or
any trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock then outstanding.
26.2. Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to Section 26.1 and without any further action
and without any notice, the right to exercise such rights shall terminate and
the only right thereafter of the holder of such Rights (other than a holder of
Rights that have become null and void pursuant to Section 7.6 hereof) shall be
to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Corporation
shall promptly give
37
public notice, and shall promptly give notice to the Rights Agent, 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 Corporation shall
promptly mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange shall state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to Section 7.6 hereof) held by each holder of Rights.
26.3. If there shall not be a sufficient number shares of Common
Stock authorized but unissued and unreserved to permit any exchange of Rights as
contemplated by this Section 26, the Corporation shall take all such action as
may be necessary to issue additional shares of Common Stock, Preferred Stock
and/or Capital Stock Equivalents with a total current market value (as
determined by the Board) equal to the total of current market value of a number
of shares of Common Stock equal to the Exchange Ratio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the date and year first written above.
THORATEC CORPORATION
By /s/ M. Xxxxx Xxxxxxxx
--------------------------------------------
Name: M. Xxxxx Xxxxxxxx
---------------------------------------
Title: Senior Vice President,
-------------------------------------
Chief Financial Officer and Secretary
-------------------------------------
COMPUTERSHARE TRUST COMPANY, INC.
as Rights Agent
By /s/ Xxxxxx Xxxxx
--------------------------------------------
Name: Xxxxxx Xxxxx
-------------------------------------
Title: Vice President
------------------------------------
By /s/ Xxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
38
EXHIBIT A
Certificate of Determination
of
Series RP Preferred Stock
of
Thoratec Corporation
(Pursuant to Section 401 of the California Corporations Code)
1. I, M. Xxxxx Xxxxxxxx, Senior Vice President, Chief Financial Officer
and Secretary of Thoratec Corporation (the "CORPORATION"), a corporation
organized and existing under the Corporations Code of the State of California,
in accordance with Section 401 thereof, DO HEREBY CERTIFY:
2. That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Amended and Restated Articles of Incorporation of the
Corporation, the Board of Directors on May 2, 2002, adopted the following
resolutions creating a series of 100,000 shares of Preferred Stock designated as
Series RP Preferred Stock, none of which have been issued.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation under its Amended and Restated Articles of
Incorporation, the Board of Directors hereby creates a series of 100,000 shares
of Series RP Preferred Stock, without par value, of the Corporation and hereby
determines that the designation and number of shares that stock and their
rights, preferences and limitations (in addition to the provisions set forth in
the Amended and Restated Articles of Incorporation of the Corporation, which are
applicable to preferred stock of all classes and series), shall be as set forth
below:
Series RP Preferred Stock
Section 1. DESIGNATION, PAR VALUE AND AMOUNT. The shares of such series
shall be designated as "Series RP Preferred Stock" (hereinafter referred to as
"SERIES RP PREFERRED STOCK"), the shares of such series shall be without par
value, and the number of shares constituting such series shall be 100,000;
provided, however, that, if more than a total of 100,000 shares of Series RP
Preferred Stock shall be issuable upon the exercise of Rights (the "RIGHTS")
issued pursuant to the Rights Agreement dated as of May 2, 2002 between the
Corporation and Computershare Trust Company, Inc., a Colorado corporation, as
Rights Agent (as amended from time to time, the "AGREEMENT"), the Board of
Directors of the Corporation shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged and filed providing for the total
number of shares of Series RP Preferred Stock authorized to be issued to be
increased (to the extent that the Restated Certificate of Incorporation then
permits) to the largest number of whole shares of Series RP Preferred Stock
(rounded up to the nearest whole number) issuable upon exercise of the Rights.
1
Section 2. DIVIDENDS AND DISTRIBUTIONS
2.1 Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series RP Preferred Stock with respect to dividends, the holders of
shares of Series RP Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of assets legally available for that
purpose, quarterly dividends payable in cash on the first business day of March,
June, September and December in each year (each such date being referred to
herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series RP Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (A) $1.00 or (B) subject to the provision
for adjustment set forth in Section 6.1, 1,000 times the total per share amount
of any and all cash dividends, and 1,000 times the total per share amount
(payable in kind) of any and all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock, no par value, of the
Corporation (the "COMMON STOCK") or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series RP Preferred Stock.
2.2 The Corporation shall declare a dividend or distribution on
the Series RP Preferred Stock as provided in Section 2.1 above immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, if no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series RP Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
2.3 Dividends shall begin to accrue and be cumulative on
outstanding shares of Series RP Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series RP
Preferred Stock, unless the date of issue of such shares is before the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issuance of such shares, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series RP
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series RP Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series RP Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 30 days before the date fixed for the payment thereof.
2
Section 3 VOTING RIGHTS. The holders of shares of Series RP Preferred
Stock shall have the following voting rights:
3.1 Except as provided in Section 3.3 and subject to the
provision for adjustment hereinafter set forth, each share of Series RP
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation.
3.2 Except as otherwise provided herein or by law, the holders of
shares of Series RP Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
3.3 The following additional provisions shall apply with respect to the
voting of shares of Series RP Preferred Stock: If, on the date used to determine
shareholders of record for any meeting of shareholders for the election of
directors, a default in preference dividends (as defined below) on the Series RP
Preferred Stock shall exist, the holders of the Series RP Preferred Stock shall
have the right, voting as a class as described in Section 3.3(B) below, to elect
two directors (in addition to the directors elected by holders of Common Stock
of the Corporation). Such right may be exercised: (i) at any meeting of
shareholders for the election of directors or (ii) at a meeting of the holders
of shares of Voting Preferred Stock (as hereinafter defined), called for the
purpose in accordance with the Bylaws of the Corporation, until all such
cumulative dividends (referred to above) shall have been paid in full or until
non-cumulative dividends have been paid regularly for at least one year. The
right of the holders of Series RP Preferred Stock to elect two directors, as
described above, shall be exercised as a class concurrently with the rights of
holders of any other series of Preferred Stock upon which voting rights to elect
such directors have been conferred and are then exercisable. The Series RP
Preferred Stock and any additional series of Preferred Stock that the
Corporation may issue and that may provide for the right to vote with the
foregoing series of Preferred Stock are collectively referred to herein as
"VOTING PREFERRED STOCK." Each director elected by the holders of shares of
Voting Preferred Stock shall be referred to herein as a "PREFERRED DIRECTOR." A
Preferred Director shall continue to serve as such for a term of one year,
except that upon any termination of the right of all holders of Voting Preferred
Stock to vote as a class for Preferred Directors, the term of office of
Preferred Directors then serving shall terminate. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of Voting Preferred Stock then entitled to vote
for the election of directors, present (in person or by proxy) and voting
together as a single class: (i) at a meeting of the shareholders or (ii) at a
meeting of the holders of shares of such Voting Preferred Stock, called for the
purpose in accordance with the Bylaws of the Corporation. So long as a default
in any preference dividends of the Series RP Preferred Stock shall exist or the
holders of any other series of Voting Preferred Stock shall be entitled to elect
Preferred Directors: (i) any vacancy in the office of a Preferred Director may
be filled (except as provided in the following clause (ii)) by an instrument in
writing signed by the remaining Preferred Director and filed with the
Corporation and (ii) in the case of the removal of any Preferred Director, the
vacancy may be filled by the vote of the holders of the outstanding shares of
Voting Preferred Stock entitled to vote for the election of directors, present
(in person or by proxy) and voting together as a single class, at such time as
the removal shall be effected. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to be a
Preferred Director.
3
Whenever (1) no default in preference dividends on the Series RP Preferred Stock
shall exist and (2) the holders of other series of Voting Preferred Stock shall
no longer be entitled to elect such Preferred Directors, then the number of
directors constituting the Board of Directors of the Corporation shall be
reduced by two. For purposes hereof, a "DEFAULT IN PREFERENCE DIVIDENDS" on the
Series RP Preferred Stock shall be deemed to have occurred whenever the amount
of cumulative and unpaid dividends on the Series RP Preferred Stock shall be
equivalent to six full quarterly dividends or more (whether or not consecutive),
and, having so occurred, such default shall be deemed to exist thereafter until,
but only until, all cumulative dividends on all shares of the Series RP
Preferred Stock then outstanding shall have been paid through the last Quarterly
Dividend Payment Date or until, but only until, non-cumulative dividends have
been paid regularly for at least one year.
3.4 Except as set forth herein (or as otherwise required by
applicable law), holders of Series RP Preferred Stock shall have no general or
special voting rights and their consent shall not be required for taking any
corporate action.
Section 4. CERTAIN RESTRICTIONS
4.1 Whenever quarterly dividends or other dividends or
distributions payable on the Series RP Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series RP Preferred Stock
outstanding shall have been paid in full, the Corporation shall not: (A) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series RP Preferred Stock, (B) declare or pay dividends, or
make any other distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the Series
RP Preferred Stock, except dividends paid ratably on the Series RP Preferred
Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled, (C) redeem or purchase or otherwise acquire for consideration (except
as provided below) shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series RP Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series RP Preferred Stock, or (D) redeem or
purchase or otherwise acquire for consideration any shares of Series RP
Preferred Stock, or any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series RP
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
4.2 The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the
4
Corporation could, under Section 4.1, purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series RP Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, in any other certificate or amendment creating a
series of Preferred Stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP
6.1 Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series RP Preferred Stock with respect to rights upon liquidation,
dissolution or winding up (voluntary or otherwise), no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series RP Preferred Stock
unless, prior thereto, the holders of shares of Series RP Preferred Stock shall
have received per share an amount equal to the greater of 1,000 times $70.00 or
1,000 times the payment made per share of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "SERIES RP LIQUIDATION PREFERENCE"). After the
payment of the full amount of the Series RP Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series RP
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "CAPITAL ADJUSTMENT") equal to the
quotient obtained by dividing (A) the Series RP Liquidation Preference by (B)
1,000 (as appropriately adjusted as set forth in Section 6.3 to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (B) being hereafter referred to as the
"ADJUSTMENT NUMBER"). After the payment of the full amount of the Series RP
Liquidation Preference and the Capital Adjustment in respect of all outstanding
shares of Series RP Preferred Stock and Common Stock, respectively, holders of
Series RP Preferred Stock and holders of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
6.2 If, in applying Section 6.1, there are some, but not
sufficient, assets available to permit payment in full of the Series RP
Liquidation Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series RP Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
Series RP Preferred Stock and the holders of such parity shares in proportion to
their respective liquidation preferences. If, in applying Section 6.1, there are
some, but not sufficient, assets available to permit payment in full of the
Capital Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
5
6.3 If the Corporation shall (A) declare any dividend on Common
Stock payable in shares of Common Stock, (B) subdivide the outstanding Common
Stock, or (C) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect immediately
before such event shall be adjusted by multiplying such Adjustment Number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event, and the denominator of which is the
number of shares of Common Stock outstanding immediately before such event.
Section 7. CONSOLIDATION, MERGER, ETC. If the Corporation is party to
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then, in any such case, the shares of Series RP
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share equal to the Adjustment Number (as appropriately adjusted as
set forth in Section 6.3 to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) times the total amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged.
Section 8. NO REDEMPTION. The shares of Series RP Preferred Stock shall
not be redeemable.
Section 9. RANKING. The Series RP Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such other
series shall provide otherwise.
Section 10. AMENDMENT. The Amended and Restated Articles of
Incorporation of the Corporation shall not be further amended in any manner that
would materially alter or change the powers, preferences or special rights of
the Series RP Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series RP Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series RP Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series RP Preferred Stock.
RESOLVED FURTHER, that each officer of the Corporation be, and each of
them hereby is, authorized to sign a Certificate of Determination with respect
to the Series RP Preferred Stock pursuant to Section 401 of the California
Corporations Code and to cause that certificate to be filed with the Secretary
of State of the State of California.
6
IN WITNESS WHEREOF, I further declare under penalty of perjury under the
laws of the state of California that the matters set forth in the foregoing
certificate are true and correct of my own knowledge.
Dated May 2, 2002
---------------------------------------
Name: M. Xxxxx Xxxxxxxx
Title: Senior Vice President, Chief
Financial Officer and Secretary
7
EXHIBIT B
Form of Right Certificate
Certificate No. RP-________ _____ Rights
NOT EXERCISABLE AFTER MAY 2, 2012 OR EARLIER IF REDEEMED BY THE
CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER
RIGHT ON THE TERMS SET FORTH IN THE AGREEMENT.
RIGHT CERTIFICATE
THORATEC CORPORATION
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 2, 2002 (the "AGREEMENT"), between Thoratec Corporation, a
California corporation (the "CORPORATION"), and Computershare Trust Company,
Inc., a Colorado corporation, (the "RIGHTS AGENT"), to purchase from the
Corporation at any time after the Distribution Date (as that term is defined in
the Agreement) and before 5:00 P.M., California time, on May 2, 2012, unless the
Rights evidenced hereby shall have been previously redeemed by the Corporation,
at the principal office or offices of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one one-thousandth
(1/1000th) of a fully paid non-assessable share of Series RP Preferred Stock
(the "PREFERRED STOCK") of the Corporation, at a purchase price of $70.00 per
one one-thousandth (1/1000th) of a share of Preferred Stock (the "PURCHASE
PRICE"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths (1/1000ths) of a share
of Preferred Stock that may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
May 2, 2002 based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as that term is defined
in the Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (A) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (B) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) who becomes a transferee after the Acquiring Person
becomes such, or (C) a transferee of an Acquiring Person (or of an Affiliate or
Associate thereof) who becomes a transferee before or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (i) a
transfer (whether or not for consideration) from the Acquiring Person (or from
any Affiliate or Associate thereof) to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the transferred
Rights or (ii) a
1
transfer that the Board of Directors of the Corporation has determined is part
of a plan, arrangement or understanding that has as a primary purpose or effect
the avoidance of Section 7.6 of the Agreement, the Rights shall become null and
void without any further action and no holder hereof shall have any rights
whatsoever with respect to such Rights, whether under the Agreement or
otherwise.
As provided in the Agreement, the Purchase Price and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock or other securities
that may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as that term is defined in the
Agreement).
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Agreement, which terms, covenants and restrictions are
hereby incorporated herein by reference and made a part hereof and to which
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 Corporation and the holders of the Right Certificates. Copies
of the Agreement are on file at the principal executive offices of the
Corporation and the office of the Rights Agent. The Corporation will mail, to
the holder of this Right Certificate, a copy of the Agreement without charge
after receipt of a written request therefor addressed to the Secretary of the
Corporation at its principal executive offices.
This Right Certificate, with or without other Right Certificates, upon
surrender at the designated office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like total number of shares
of Preferred Stock or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the Agreement, the Rights evidenced by this Certificate may
be redeemed by the Corporation at a redemption price of $0.0001 per Right
(subject to adjustment as provided in the Agreement) payable in cash.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions that are one
one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th)
of a share of Preferred Stock, which may, at the election of the Corporation, be
evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of the Preferred
Stock or of any other securities of the Corporation that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Agreement
or herein be construed to confer upon the holder hereof, as such, any
2
of the rights of a shareholder of the Corporation 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 Agreement), or to receive dividends or other distributions or to
exercise any preemptive or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Agreement.
This Right 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 Corporation.
Dated as of _____________, 20__
THORATEC CORPORATION
By
--------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
COMPUTERSHARE TRUST COMPANY, INC.
as Rights Agent
By
--------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
By
--------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED______________________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ attorney-in-fact
to transfer the Right Certificate on the books of the Corporation with full
power of substitution.
Dated:__________, 20___ ____________________________________
Signature
Signature Guaranteed:
___________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) adopted under the
Securities Exchange Act of 1934, as amended. (This term means, in general,
banks, stock brokers, savings and loan associations, and credit unions, in each
case with membership in an approved signature guarantee medallion program.)
The undersigned hereby certifies that (A) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as those terms are defined in the Agreement), (B) this Right Certificate is not
being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (C) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as those terms are defined in the
Agreement).
___________________________________.
Signature
4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires
to exercise Rights represented by the Right Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock, shares of Common Stock or other securities issuable upon the exercise of
such Rights and requests that certificates for such shares of Preferred Stock,
shares of Common Stock or other securities be issued in the name of:____________
________________________________________________________________________________
(Please print name and address)
Please insert social security number
or other identifying number_____________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:_____________________
________________________________________________________________________________
(Please print name and address)
Please insert social security number
or other identifying number_____________________________________________________
Dated: __________, 20___
________________________________________
Signature
Signature Guaranteed:
__________________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) adopted under the
Securities Exchange Act of 1934, as amended. (This term means, in general,
banks, stock brokers, savings and loan associations, and credit unions, in each
case with membership in an approved signature guarantee medallion program.)
5
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that (A) the Rights evidenced by this
Right Certificate are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate thereof (as those terms are
defined in the Agreement), (B) this Right Certificate is not being sold,
assigned or transferred by or on behalf of any such Acquiring Person, Affiliate
or Associate, and (C) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as those terms are defined in the Agreement).
____________________________________
Signature
Notice
The signature on the foregoing Forms of Assignment and Election and
certificates must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration, enlargement or any change
whatsoever.
If 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
Corporation and the Rights Agent may deem the Beneficial Owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as those terms are defined in the Right Agreement) and such
Assignment or Election to Purchase may not be honored.
6
EXHIBIT C
THORATEC CORPORATION
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
SUMMARY OF RIGHTS TO PURCHASE
SERIES RP PREFERRED SHARES
On May 2, 2002, the Board of Directors (the "BOARD") of Thoratec
Corporation (the "CORPORATION") declared a dividend distribution of one
preferred share purchase right (a "RIGHT") for each outstanding share of Common
Stock (the "COMMON STOCK") of the Corporation. The dividend is payable to the
shareholders of record on May 17, 2002 (the "RECORD DATE"), and with respect to
shares of Common Stock issued thereafter until the Distribution Date (as defined
below) and, in certain circumstances, with respect to shares of Common Stock
issued after the Distribution Date. Except as set forth below, when it becomes
exercisable, each Right entitles the registered holder to purchase from the
Corporation one one-thousandth (1/1000th) of a share of Series RP Preferred
Stock, without par value (the "PREFERRED STOCK"), of the Corporation at a price
of $70.00 per one one-thousandth (1/1000th) of a share of Preferred Stock (the
"PURCHASE PRICE"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "AGREEMENT") between the
Corporation and Computershare Trust Company, Inc., a Colorado corporation, as
rights agent (the "RIGHTS AGENT"), dated as of May 2, 2002.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates representing the Rights ("RIGHT CERTIFICATES") will be distributed.
The Rights will separate from the Common Stock upon the earlier to occur of (A)
a person or group of affiliated or associated persons having acquired, without
the prior approval of the Board, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (except pursuant to a Permitted Offer, as
explained below) or (B) ten days (or such later date as the Board may determine)
after the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the completion of which would result in a person or
group of affiliated or associated persons becoming an Acquiring Person (as
defined below) (the "DISTRIBUTION DATE"). A person or group whose acquisition of
shares of Common Stock cause a Distribution Date pursuant to clause (A) above is
an "Acquiring Person," with certain exceptions set forth in the Agreement. The
date that a person or group is first publicly announced to have become such by
the Corporation or such Acquiring Person is referred to below and in the
Agreement as the "Shares Acquisition Date".
The Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the associated shares of Common
Stock. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of shares of Common Stock will contain a notation
incorporating the Agreement by reference. Until the Distribution Date (or
earlier
1
redemption or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable
after the Distribution Date, Right Certificates will be mailed to the holders of
record of the shares of Common Stock as of the Close of Business (as defined in
the Agreement) on the Distribution Date (and to each initial record holder of
certain shares of Common Stock issued after the Distribution Date), and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the Close of Business on May 2, 2012, unless earlier redeemed by
the Corporation as described below.
If any person becomes an Acquiring Person (except pursuant to a
tender or exchange offer which is for all outstanding shares of Common Stock at
a price and on terms which a majority of certain members of the Board determines
to be adequate and in the best interests of the Corporation, its shareholders
and other relevant constituencies, other than such Acquiring Person, its
affiliates and associates (a "PERMITTED OFFER")), each holder of a Right will
thereafter have the right (the "FLIP-IN RIGHT") to receive, upon exercise, the
number of shares of Common Stock (or, in certain circumstances, of one
one-thousandths (1/1000ths) of a share of Preferred Stock or other securities of
the Corporation) having a value (immediately before such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing,
after the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Agreement) were, beneficially
owned by any Acquiring Person or any affiliate or associate thereof will be null
and void. The Board has the option, at any time after any person becomes an
Acquiring Person, to exchange all or part of the then-exercisable Rights
(excluding those that have become void, as described in the immediately
preceding sentence) for shares of Common Stock, at an exchange ratio determined
by dividing the then-applicable Purchase Price by the then-current market price
per share of Common Stock as determined in accordance with the Agreement.
However, this option generally terminates if any person becomes the beneficial
owner of 50% or more of the Common Stock.
If, at any time after the Shares Acquisition Date, (A) the
Corporation is acquired in a merger or other business combination transaction in
which the holders of all the outstanding shares of Common Stock immediately
before the completion of the transaction are not the holders of all the
surviving corporation's voting power, or (B) more than 50% of the Corporation's
assets or earning power is sold or transferred, in either case with or to (i) an
Acquiring Person or any affiliate or associate thereof or (ii) any other person
acting on behalf of or in concert with such Acquiring Person, affiliate or
associate, or (iii) if, in such transaction, all holders of shares of Common
Stock are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "FLIP-OVER RIGHT") to receive, upon exercise,
common shares of the acquiring company (or, in certain circumstances, its
parent), having a value equal to two times the exercise price of the Right. The
holder of a Right will continue to have the Flip-Over Right whether or not such
holder exercises or surrenders the Flip-In Right.
2
The Purchase Price payable, and the number of shares of Preferred
Stock, shares of Common Stock or other securities issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (A) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (B) upon the grant to holders of
shares of the Preferred Stock of certain rights or warrants to subscribe for or
purchase Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (C) upon the distribution to holders of shares of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock issuable upon exercise
of each Right are also subject to adjustment in the event of a stock split of
the Common Stock or a stock dividend on the Common Stock payable in Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, before the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but, if greater, will
be entitled to an total dividend per share of 1,000 times the dividend declared
per share of Common Stock. In the event of liquidation, the holders of shares of
the Preferred Stock will be entitled to a minimum preferential liquidation
payment per share in an amount equal to the greater of $70.00 or 1,000 times the
payment made per share of Common Stock plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "SERIES RP LIQUIDATION PREFERENCE"). Thereafter, and after
the holders of shares of the Common Stock receive a liquidation payment of an
amount equal to the quotient obtained by dividing the Series RP Liquidation
Preference by 1,000 (subject to certain adjustments for stock splits, stock
dividends and recapitalizations with respect to the Common Stock), the holders
of shares of the Preferred Stock and the holders of the Common Stock will share
the remaining assets in the ratio of 1,000 to 1 (as adjusted) for each share of
Preferred Stock and Common Stock so held, respectively. Finally, in the event of
any merger, consolidation or other transaction in which shares of Common Stock
are exchanged, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock. These rights are protected
by customary antidilution provisions. If the amount of accrued and unpaid
dividends on the Preferred Stock is equivalent to six full quarterly dividends
or more, the holders of shares of the Preferred Stock will have the right,
voting as a class, to elect two directors in addition to the directors elected
by the holders of shares of the Common Stock until all cumulative dividends on
the Preferred Stock have been paid or set apart for payment through the last
quarterly dividend payment date. No fractional shares of Preferred Stock will be
issued (other than fractions which are one one-thousandth (1/1000th) or integral
multiples of one one-thousandth (1/1000th) of a share of Preferred Stock, which
may, at the election of the Corporation, be evidenced by depositary receipts)
and in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading day before the date of
exercise.
3
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price.
At any time before the earlier to occur of (A) a person becoming
an Acquiring Person or (B) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price (payable in cash or, at the Corporation's election, in Common Stock)
of $0.0001 per Right (the "REDEMPTION PRICE"). Any redemption would be effective
upon the action of the Board. Additionally, after the Shares Acquisition Date,
the Corporation may redeem the then outstanding Rights in whole, but not in
part, at the Redemption Price, provided that such redemption is in connection
with a merger or other business combination transaction or series of
transactions involving the Corporation in which all holders of shares of Common
Stock are treated alike but not involving an Acquiring Person or its affiliates
or associates.
Other than those provisions relating to the rights, duties and
obligations of the Rights Agent and certain principal economic terms of the
Rights, all the provisions of the Agreement may be amended by the Board before
the Distribution Date. After the Distribution Date, the Agreement may only be
amended by the Board in order to cure any ambiguity, defect or inconsistency, to
make changes that do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, subject to certain
limitations, to shorten or lengthen any time period under the Agreement.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Corporation, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to shareholders of the Corporation, shareholders
may, depending upon the circumstances, recognize taxable income should the
Rights become exercisable or upon the occurrence of certain events thereafter.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Agreement is available free of charge from the Corporation. This
summary description of the Rights does not purport to be complete. It is
qualified in its entirety by reference to the Agreement, which is hereby
incorporated herein by reference.
4
