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EXHIBIT 4.1
RIGHTS AGREEMENT
BETWEEN
QUEST MEDICAL, INC.
AND
MTRUST CORP, N.A.
AS
RIGHTS AGENT
Dated as of October 12, 1989
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QUEST MEDICAL, INC. RIGHTS AGREEMENT
TABLE OF CONTENTS
Page
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Transfer, Split Up, Combination,
and Exchange of Right Certificates;
Mutilated, Destroyed, Lost, or Stolen
Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Cancellation and Destruction of
Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9. Reservation and Availability of
Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 10. Preferred Shares Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 11. Adjustment of Purchase Price, Number
of Shares, or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 13. Consolidation, Merger, or Sale or Transfer
of Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 17. Right Certificate Holder Not Deemed
a Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 19. Merger, Consolidation, or Change of
Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 27. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 28. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 29. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 30. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 31. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 32. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 12, 1989 (the "Agreement"),
between QUEST MEDICAL, INC., a Texas corporation (the "Company"), and MTRUST
CORP, N.A., a national banking association (the "Rights Agent").
RECITAL
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a "Right") for each
Common Share (as defined below) of the Company outstanding at the Close of
Business (as defined below) on October 23, 1989 (the "Record Date"), each Right
representing the right to purchase one-half Common Share, upon the terms and
subject to the conditions set forth in this Agreement, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that becomes outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date, and the Final Expiration Date (as such
terms are defined below).
THEREFORE, In consideration of the foregoing and the mutual agreements
set forth below, the parties to this Agreement hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the indicated
meanings:
(a) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the Common Shares then outstanding. The term "Acquiring Person" shall
not include the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any Person holding
Common Shares for or pursuant to the terms of any such plan. For the purposes
of this Agreement, a Person who becomes an Acquiring Person by acquiring
beneficial ownership of 15% or more of the Common Shares at any time after the
date of this Agreement shall continue to be an Acquiring Person whether or not
such Person continues to be the Beneficial Owner of 15% or more of the Common
Shares outstanding.
(b) "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act in effect on the date of this Agreement.
(c) A Person will be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities that:
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(i) such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly in accordance
with the regulations under the Exchange Act in effect on the date of
this Agreement;
(ii) such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the
occurrence of any events or conditions) pursuant to any written or
oral agreement, arrangement, or understanding (other than the
ownership by underwriters or selling group members under customary
agreements with respect to abona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants, options, or otherwise; provided,
however, that a Person will not be deemed the Beneficial Owner of, or
to beneficially own, any security tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote or direct
or influence the voting of pursuant to any written or oral agreement,
arrangement, or understanding;provided, however, that a Person will
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
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any written or oral agreement,
arrangement, or understanding (other than the ownership by
underwriters or selling group members under customary agreements with
respect to a bonafide public offering of securities) for the purpose
of acquiring, holding, voting (except to the extent contemplated by
the proviso t oSection 1(c)(ii)(B)), or disposing of any such
securities.
(d) "Board Approval" means that an action or the resolution
authorizing an action has been approved by both (i) a majority of the members
of the Board of Directors of the Company and (ii) a majority (but not less than
one) of the Continuing Directors then serving on the Company's Board of
Directors.
(e) "Business Day" means any day other than a Saturday, a Sunday,
or a day on which the Rights Agent is authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date means 5:00 p.m., Dallas,
Texas time, on such date; provided, however, that if such date is not a
Business Day it means 5:00 p.m., Dallas, Texas time, on the next succeeding
Business Day.
(g) "Common Shares" when used with reference to the Company means
the shares of common stock, $0.05 par value, of the Company. "Common Shares"
when used with reference to any Person other than the Company means the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the capital stock
(or equity interest) with the
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greatest voting power of the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Continuing Director" means a director of the Company who (i)
is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person
and (ii) was either a member of the Board of Directors of the Company on the
date of this Agreement or who subsequently became a director of the Company and
whose initial election or initial nomination for election by the Company's
shareholders was approved by a majority of the Continuing Directors then on the
Board of Directors of the Company.
(i) The "current per share market price" of any security (a
"Security" for the purpose of this definition) on any date for the purpose of
any computation under this Agreement, will be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Security is determined
during a period following (A) the announcement by the issuer of such Security
of (i) a dividend or distribution on such Security payable in shares of such
Security or securities convertible, directly or indirectly, into shares of such
Security, or (ii) any subdivision, combination, or reclassification of such
Security and (B) prior to the expiration of thirty (30) Trading Days after 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 will be appropriately adjusted to reflect
the current market price per share equivalent of such Security. The closing
price for each day will be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, 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 such other system then in
use, or, if on any such date the Security is 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 Security selected by the Board
of Directors of the Company.
(j) "Distribution Date" means the Close of Business on the tenth
(10th) day after the earlier to occur of (i) the Shares Acquisition Date or
(ii) the date any Person commences or publicly announces an intention to
commence a tender offer or exchange offer for the Common Shares which would
result in, upon the consummation of such offer, the Person making such offer,
together with all of its Affiliates and Associates, being the Beneficial Owner
of 20% or more of the Common Shares then outstanding (including any such date
that is after the date of this Agreement and prior to the issuance of the
Rights); provided, however, that if the tender offer or exchange offer that
gave rise to the Distribution Date is cancelled, terminated or
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otherwise withdrawn within ten (10) days of its announcement, such offer shall
be deemed never to have been made and no Distribution Date shall occur with
respect thereto.
(k) "Equivalent Common Shares" means any shares of the Company's
capital stock having substantially the same rights, privileges and preferences
as the Common Shares.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Final Expiration Date" means the Close of Business on October
12, 1999.
(n) "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotations System.
(o) "Permitted Transaction" means a stock acquisition or a tender
or exchange offer pursuant to a definitive agreement by which a Person (who is
not at the time an Acquiring Person) would become an Acquiring Person and which
has received Board Approval prior to the execution of the definitive agreement
providing for the acquisition or the public announcement of the offer, as the
case may be.
(p) "Person" means any individual, firm, corporation, partnership,
trust or other entity, and includes any successor (by merger or otherwise) of
such Person.
(q) "Purchase Price" means the price per Common Share at which the
Rights can initially be exercised as set forth on the Rights Certificate,
subject to adjustment as provided in this Agreement.
(r) A "Qualifying Offer" means an all-cash tender offer by a
Person who, at the time such offer is made and during the pendency of such
offer, is not an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, for all outstanding shares of Voting Stock of the Company that are not
beneficially owned by such Person, which offer is made pursuant to Schedule
14D-1 (or any successor form) filed with the Securities and Exchange Commission
and which tender offer:
(i) provides that such tender offer will remain open for
at least ninety (90) days;
(ii) provides for the payment to tendering shareholders of
per share consideration at least equal to the highest per share
consideration paid (including all commissions, taxes, fees and other
costs paid on a per share basis) by the Person or Persons making the
tender offer and its/their Affiliates and Associates for such Voting
Stock within the twelve (12) month period preceding the commencement
of the tender offer;
(iii) results in the acquisition of at least a majority of
each class of the outstanding Voting Stock; and
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(iv) contains in the tender offer materials an
unconditional undertaking to acquire all of the remaining outstanding
Voting Stock of the Company in a second-step merger within 120 days
after the closing of the offer pursuant to which non-tendering
shareholders would be entitled to receive at least the same cash
consideration being offered in such tender offer.
(s) "Record Date" has the meaning set forth in the preamble to
this Agreement.
(t) "Redemption Date" means the Close of Business on the date at
which the Rights are redeemed as provided in Section 23 of this Agreement.
(u) "Redemption Price" means, initially, $0.01 per Right; provided
that the Redemption Price shall be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of this
Agreement.
(v) "Right" has the meaning set forth in the preamble to this
Agreement.
(w) "Right Certificate" means a certificate in substantially the
form of Exhibit A to this Agreement issued after the Distribution Date in
accordance with Section 3 of this Agreement.
(x) "Rights Agent" has the meaning set forth in the preamble to
this Agreement.
(y) "Securities Act" means the Securities Act of 1933, as amended.
(z) "Shares Acquisition Date" means the first date of a public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(aa) "Subsidiary" of any Person means any Person of which a
majority of the voting power of the voting equity securities or equity interest
is owned or controlled, directly or indirectly, by such Person.
(bb) "Summary of the Rights" means a summary of the terms of the
Rights in substantially the form of Exhibit B to this Agreement.
(cc) "Trading Day" means a day on which the principal national
securities exchange on which a security is listed or admitted to trading is
open for the transaction of business or, if a security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(dd) "Trigger Event" means one or more of the following occurring
on or after a Shares Acquisition Date:
(i) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person shall directly or indirectly (A) consolidate with
or merge with and into the
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Company or otherwise combine with the Company and the Company shall be
the continuing or surviving corporation of such merger or combination
and the Common Shares of the Company shall remain outstanding and
unchanged; (B) in one or more transactions transfer any assets to the
Company in exchange (in whole or in part) for shares of any Voting
Stock of the Company or for securities exercisable for or convertible,
directly or indirectly, into shares of Voting Stock of the Company or
otherwise obtain from the Company, with or without consideration, any
additional shares of any Voting Stock of the Company or securities,
rights or warrants exercisable for or convertible, directly or
indirectly, into shares of any Voting Stock of the Company (other than
in connection with (1) the exercise of a Right or Rights, (2) the
exercise or conversion of securities exercisable for or convertible
into Voting Stock of the Company which securities were outstanding
prior to the time the Acquiring Person became such and (3) a pro rata
distribution to all holders of any class of capital stock of the
Company or of its Subsidiaries); (C) sell, purchase, lease, exchange,
mortgage, pledge, license, transfer or otherwise dispose, in one or
more transactions, of, to, from or with, as the case may be, the
Company or any of its Subsidiaries, assets (including securities) on
terms and conditions less favorable to the Company or its Subsidiaries
than the Company or its Subsidiaries could reasonably be expected to
obtain in arm's length negotiation with an unaffiliated third party;
(D) engage in one or more transactions with the Company or any of its
Subsidiaries involving the sale, purchase, lease, exchange, mortgage,
pledge, transfer or other disposition of assets having an aggregate
fair market value of more than $5,000,000; or (E) receive the benefit,
directly or indirectly (except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the Company or
any of its Subsidiaries; or
(ii) any Person (other than the Company, any of its
Subsidiaries, any employee benefit plan of the Company or its
Subsidiaries or any entity organized, appointed or established
pursuant to the terms of such plan), alone or together with its
Affiliates and Associates, shall beneficially own 20% or more of the
Common Shares then outstanding (unless each acquisition of Common
Shares which results in the beneficial ownership of such Person
equaling or exceeding 20% of the Common Shares is a Qualifying Offer
or a Permitted Transaction); or
(iii) any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions (whether or not with
or into or otherwise involving an Acquiring Person or any of its
Affiliates or Associates) which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of
any class of outstanding Voting Stock of the Company or any of its
Subsidiaries which is beneficially owned by any Acquiring Person and
its Affiliates and Associates.
(ee) "Voting Stock" shall mean (i) the Common Shares and (ii) any
other shares of capital stock of the Company entitled to vote generally in the
election of directors or entitled to
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vote together with the Common Shares in respect of any merger, consolidation,
sale of all or substantially all of the Company's assets, liquidation,
dissolution or winding up.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who will prior to the Distribution Date
also be the holders of the Common Shares in accordance with Section 3 of this
Agreement) subject to the terms and conditions of this Agreement, and the
Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary, appropriate or
desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Section 3(b) of this Agreement) by the
certificates for Common Shares registered in the names of the holders of such
certificates (which certificates will also be deemed to be Right Certificates)
and not by separate Right Certificates, and (ii) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Shares. The Company shall give the Rights Agent prior written notice of
the Distribution Date and the circumstances giving rise thereto. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares (except as
otherwise provided in Section 11(a)(iii) of this Agreement) as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate evidencing one Right for each
Common Share so held, subject to the adjustments as provided herein. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares 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 of such
certificates together with a copy of the Summary of Rights attached to such
certificates. Until the Distribution Date (or the earlier of the Redemption
Date or Final Expiration Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights attached to such certificates, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificates.
(c) Certificates for Common Shares that become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this Section 3 (c)) after the Record Date but prior to the
Close of Business on the earlier of the Distribution Date, the
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Redemption Date, or the Final Expiration Date will have impressed on, printed
on, written on, or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder of
this certificate to certain rights as set forth in a Rights
Agreement between Quest Medical, Inc. and MTrust Corp, N.A.,
dated as of October 12, 1989 (the "Rights Agreement"), the
terms of which are hereby incorporated in this certificate by
reference and a copy of which is on file at the principal
executive offices of Quest Medical, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Quest Medical, Inc.
will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request for a copy of the Rights Agreement. As described in
the Rights Agreement, Rights issued to Acquiring Persons (as
defined in the Rights Agreement) may under certain
circumstances become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates will be evidenced by such certificates alone, and the
surrender for transfer of any such certificate will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares will be deemed cancelled and retired so that
the Company will not be entitled to exercise any Rights associated with the
Common Shares that are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates (and the forms of election to purchase Common
Shares and of assignment to be printed on the reverse of the Right
Certificates) will be substantially in the form of Exhibit A to this Agreement
and, in addition, may have such marks of identification or designation and such
legends, summaries, or endorsements printed on such Right Certificates as the
Company may deem necessary or appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law, rule, or regulation, to comply with any rule or regulation of
any stock exchange or interdealer quotation system on which the Rights may from
time to time be listed or traded, or to conform to usage. Subject to the
provisions of Section 22 of this Agreement, the Right Certificates will entitle
the holders of such certificates to purchase such number of Common Shares as
will be set forth in such certificates at the Purchase Price, but the number of
such Common Shares and the Purchase Price shall be subject to adjustment as
provided in this Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President, its Chief Operating Officer, or any of its Vice Presidents, either
manually or by facsimile signature, will have affixed the Company's seal or a
facsimile of the Company's seal, and will be attested by the Secretary or an
Assistant
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Secretary or the Treasurer or an Assistant Treasurer of the Company, either
manually or by facsimile signature. Upon an order or request of the Company,
the Right Certificates will be countersigned manually or by facsimile signature
by the Rights Agent and will not be valid for any purpose unless countersigned.
In case any officer of the Company who has signed any of the Right Certificates
ceases to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any officer
who, at the actual date of the execution of such Right Certificate, is a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its shareholder services offices, books for registration
and transfer of the Right Certificates issued under this Agreement. Such books
will show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION, AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14 of this Agreement, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of the 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 in the
aggregate a like number of Common Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates will make such request in writing delivered
to the Rights Agent, and will surrender the Right Certificate or Right
Certificates to be transferred, split up, combined, or exchanged with the form
of assignment thereon duly executed at the shareholder services office of the
Rights Agent. Thereupon the Rights Agent will countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company or the Rights Agent 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.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Right Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental to such indemnity or security, and upon surrender to the
Rights Agent and the cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new
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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.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced by such certificate (except as otherwise provided in this
Agreement) 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 on
the reverse side of such certificate duly executed, to the Rights Agent at the
shareholder services office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one-half Common Share as
to which the Rights are exercised, at or prior to the earlier of (i) the Final
Expiration Date or (ii) the Redemption Date.
(b) The Purchase Price for each one-half Common Share purchased
pursuant to the exercise of a Right will initially be $5.00, will be subject to
adjustment from time to time as provided in Sections 11 and 13 of this
Agreement and will be payable in lawful money of the United States of America
in accordance with Section 7(c) of this Agreement.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 of this Agreement by certified
check, cashier's check, bank draft, or money order payable to the order of the
Company or the Rights Agent, the Rights Agent will thereupon promptly (i)
requisition from any transfer agent of the Common Shares certificates (or make
available certificates if the Rights Agent is the transfer agent for such
shares) for the number of Common Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests;
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance with Section 14 of
this Agreement; (iii) after receipt of such Common Shares certificates, 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 (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate. In the
event the Company is obligated to issue other securities (including Common
Shares) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) of this Rights Agreement, the Company will make all arrangements
necessary so that other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced by such certificate, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
will be countersigned by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 of this Agreement.
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SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange will, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent, will be cancelled by
it, and no Right Certificates will be issued in lieu of such certificates
except as expressly permitted by the provisions of this Agreement. The Company
will deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent will so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise of such
certificates. The Rights Agent will deliver all cancelled Right Certificates
to the Company, or, at the written request of the Company, will destroy such
cancelled Right Certificates, and in such case will deliver a certificate of
destruction of such certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares or
any Common Shares held in its treasury, the number of Common Shares that will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares delivered upon
exercise of Rights will be, at the time of delivery of the certificates for
such Common Shares (subject to payment of the Purchase Price), duly and validly
authorized and issued, fully paid, and nonassessable shares.
(c) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Common Shares upon the exercise of Rights. The Company will not,
however, be required to pay any transfer tax 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 Common Shares or other securities in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise. Further, the Company will not be required to issue
or deliver any certificates for Common Shares or other securities upon the
exercise of any Rights until any such tax has been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
(d) The Company also covenants and agrees to use its best efforts
to (i) file, as soon as practicable following the first occurrence of a Trigger
Event or as soon as is required by applicable law following the Distribution
Date, as the case may be, a registration statement under the Securities Act
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
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which the Rights are no longer exercisable for such securities and (B) the
Final Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with the applicable securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. All of the Company's actions under this Section 9(d) shall be at
the Company's expense.
(e) If the Common Shares or other securities issuable upon the
exercise of the Rights are listed on any national securities exchange or
interdealer quotation system of a registered national securities association,
the Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all Common Shares or other securities reserved
for such issuance to be listed on such exchange or quotation system upon
official notice of issuance.
SECTION 10. COMMON SHARES RECORD DATE.
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights will, for all purposes, be deemed to have become
the holder of record of the Common Shares represented by such certificate on,
and such certificate will be dated, the date on which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Shares
transfer books of the Company are closed, such Person will be deemed to have
become the record holder of such shares on, and such certificate will be dated,
the next succeeding Business Day on which the Common Shares transfer books of
the Company are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES, OR
NUMBER OF RIGHTS.
The Purchase Price, the number of Common 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.
(a) (i) In the event the Company, at any time after
the date of this Agreement, (A) declares a dividend on the
Common Shares payable in Common Shares, (B) subdivides the
outstanding Common Shares, (C) combines the outstanding Common
Shares into a smaller number of Common Shares, or (D) issues
any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) of this Agreement,
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 covered by such Right on
such date, will be proportionately adjusted so that the holder
of any Right exercised after such time will be entitled to
receive the aggregate number and kind of shares of capital
stock that, if such Right had been exercised immediately prior
to such date and at a time when the
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Common Shares transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision,
combination, or reclassification.
(ii) Upon the effective date of a Trigger Event, proper
provision will be made so that each holder of a Right, except
as provided below, will thereafter have a right to receive,
upon exercise of such Right at a price equal to the then
current Purchase Price multiplied by the number of Common
Shares for which a Right is then exercisable, in accordance
with the terms of this Agreement, such number of Common Shares
(the "number of Adjustment Shares") of the Company as then
equal the result obtained by (A) multiplying the then current
Purchase Price by the then number of Common Shares for which a
Right is then exercisable and dividing that product by (B) 50%
of the then current per share market price of the
Company's Common Shares on the effective date of such Trigger
Event.
(iii) Notwithstanding the foregoing, from and after the
effective date of a Trigger Event, any Rights that are or were
acquired or beneficially owned by an Acquiring Person (or any
Associate or Affiliate of an Acquiring Person) will be void
and any holder or transferee of such Rights will thereafter
have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate will be issued pursuant
toSection 3 of this Agreement that represents Rights
beneficially owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person and no Right Certificate will
be issued at any time upon the transfer of any Rights to an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person or to any nominee or representative of such Acquiring
Person, Associate, or Affiliate. Any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring
Person or any Associate or Affiliate of an Acquiring
Person will be cancelled.
(iv) In the event that there are not sufficient Common
Shares issued but not outstanding or authorized but unissued
to permit the exercise in full of the Rights in accordance
with Section 11(a)(ii)of this Agreement, the Company shall:
(A) determine the excess of (1) the current market value of
the number of Adjustment Shares issuable upon the exercise of
a Right (the "Current Value") over (2) the Purchase Price
(such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the number of
Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price (but
not below zero), (3) Common Shares or other equity securities
of the Company (including, without limitation, shares, or
units of shares which the Board of Directors of the Company
has deemed to have the same value and voting rights as shares
of Common Shares), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board
of Directors
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of the Company; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the effective date
of a Trigger Event, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the
Spread. For purposes of this Section 11(a)(iv), the value of
the Common Shares shall be the current per share market price
of the Common Shares on the effective date of the Trigger
Event.
(b) In case the Company fixes a record date for the issuance of
rights, options, or warrants to all holders of Common Shares entitling them
(for a period expiring within forty-five (45) days after such record date) to
subscribe for or purchase Common Shares or Equivalent Common Shares or
securities convertible, directly or indirectly, into Common Shares or
Equivalent Common Shares at a price per Common Share or Equivalent Common Share
(or having a conversion price per share, if a security convertible into Common
Shares or Equivalent Common Shares) less than the then current per share market
price of the Common Shares on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Common Shares outstanding on such record
date plus the number of Common Shares that the aggregate offering price of the
total number of Common Shares and/or Equivalent Common Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which is the number of Common Shares outstanding on such record date plus
the number of additional Common Shares and/or Equivalent Common Shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid in a consideration part or all of which is in a form other than
cash, the value of such consideration will be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Common Shares owned by or held for
the account of the Company will not be deemed outstanding for the purpose of
any such computation. Such adjustment will be made successively whenever such
a record date is fixed; and in the event that such rights or warrants are not
so issued, the Purchase Price will be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a dividend payable in Common Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
of this Agreement), the Purchase Price to be in effect after such record date
will be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which is the then
current per share market price of the Common Shares on such record date, less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination will be described in a statement filed with
the Rights Agent) of the portion
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of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Common Share and the
denominator of which is such current per share market price of the Common
Shares. Such adjustments will be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price will again be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(d) No adjustment in the Purchase Price will be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(d) are not required to be made will be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 will be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11(d) will be made no later than the earlier of (i)
three (3) years from the date of the transaction that requires such adjustment
or (ii) the date of the expiration of the right to exercise any Rights.
(e) If, as a result of an adjustment made pursuant to Section
11(a) of this Agreement, the holder of any Right thereafter exercised becomes
entitled to receive any shares of capital stock of the Company other than
Common Shares, the number of such other shares so receivable upon exercise of
any Right will 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
Common Shares contained in Sections 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, and 13 with respect to the Common Shares will
apply on like terms to any such other shares.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price under this Agreement will evidence the
right to purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time under this Agreement upon exercise of the Rights,
all subject to further adjustment as provided in this Agreement.
(g) Unless the Company has exercised its election as provided in
Section 11(h) of this Agreement, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(b) and (c) of this Agreement,
each Right outstanding immediately prior to the making of such adjustment will
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Common Shares (calculated to the nearest one ten-thousandth of a
Common Share) obtained by (i) multiplying (A) the number of Common Shares
covered by a Right immediately prior to this adjustment by (B) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights will be exercisable for the number of Common Shares
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for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights will
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company will make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment to be made. Such 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, will be at least seven (7) Business 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(h), the Company will, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 of this Agreement, the
additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, will cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender of Right Certificates (if required by the Company) new Right
Certificates evidencing all the Rights to which such holders are entitled after
such adjustment. Right Certificates so to be distributed will be issued,
executed and countersigned in the manner provided for in this Agreement and
will be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price
or the number of Common Shares 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 Common Shares that were expressed in the
initial Right Certificates issued under this Agreement.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Common Shares or other securities issuable upon exercise of the
Rights, the Company will take all such action as may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable Common
Shares or other securities at such adjusted Purchase Price.
(k) In any case in which this Section 11 requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Common Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company will deliver to such holder a due xxxx or
other appropriate instrument evidencing right of such holder to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding,
the Company will be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion determines
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to be advisable in order that any consolidation or subdivision of the Common
Shares, issuance wholly for cash of any Common Shares at less than the current
per share market price, issuance wholly for cash of any Common Shares or
securities that by their terms are directly or indirectly convertible into or
exchangeable for Common Shares, dividends in Common Shares payable in Common
Shares or issuance of rights, options, or warrants referred to in Section 11(b)
of this Agreement, hereafter made by the Company to holders of its Common
Shares will not be taxable to such shareholders.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES.
Whenever an adjustment is made as provided inSections 11 and 13 of
this Agreement, the Company will promptly (a) prepare a certificate setting
forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares a copy of such certificate, and (c) mail a brief summary of such
certificate to each holder of a Right Certificate in accordance with Section 25
of this Agreement; provided, however, that the failure of the Company to make
such a certificate or give notice shall not affect the validity or the force or
effect of the requirement for such an adjustment. The Rights Agent shall be
fully protected in relying on such certificate and any adjustment therein
contained.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) In the event on or after the Shares Acquisition Date, directly
or indirectly, (i) the Company consolidates with or merges with and into any
other Person; (ii) any Person consolidates with the Company or merges with and
into the Company and the Company is the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the Common
Shares is changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property; or (iii) the Company
sells or otherwise transfers (or one or more of its Subsidiaries sells or
otherwise transfers) in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than the Company or
one or more of its wholly owned Subsidiaries, then, and in each such case,
proper provision will be made so that (A) following the Distribution Date, each
holder of a Right (except as otherwise provided in this Agreement) will
thereafter have the right to receive, upon the exercise of such Rights at a
price equal to the then current Purchase Price multiplied by the number of
Common Shares for which a Right is then exercisable, in accordance with the
terms of this Agreement, such number of Common Shares of the Principal Person
(as defined below) as is equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Common Shares for which a Right is
then exercisable and dividing that product by (2) 50% of the then current per
share market price of the Common Shares of the Principal Person on the date of
consummation of such consolidation, merger, sale, or transfer; (B) the
Principal Person will thereafter be liable for, and will assume, by virtue of
such consolidation, merger, sale, or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term "Company" will
thereafter be deemed to refer to the Principal Person; and (D) the Principal
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Person will take all such steps (including, but not limited to, the reservation
of a sufficient number of its Common Shares in accordance with Section 9 of
this Agreement) in connection with such consummation as may be necessary to
assure that the provisions of this Agreement will thereafter be applicable, as
nearly as possible, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights.
(b) The term "Principal Person" shall mean
(i) In the case of any transaction described in
sub-clause (i) or (ii) of this Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to the
merger or consolidation; and
(ii) in the case of any transaction described in the
sub-clause (iii) of this Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (A) if the Common 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 or Affiliate of another Person,
"Principal Person" shall refer to such other Person; (B) in case such Person is
a subsidiary, directly or indirectly, or Affiliate of more than one Person, the
Common Stock of two or more of which are and have been so registered,
"Principal Person" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate 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 Persons
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.
(c) The Company will not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments, or securities outstanding or any written or oral
agreements, arrangements or understandings that, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The Company will not
consummate any such consolidation, merger, sale, or transfer unless prior to
such consummation the Company and the Principal Person shall have executed and
delivered to the Rights Agent a supplemental agreement so providing and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets mentioned in paragraph (a) of this Section
13, the Principal Person at its own expense will take each of the following
actions:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, will
use its best efforts to cause such registration statement to become
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effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the applicable securities or blue sky laws of such jurisdictions
as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Person and each of its Affiliates which
comply in all material respects with the requirements for registration
on Form 10 (or any successor form) under the Exchange Act.
(d) The provisions of this Section 13 will similarly apply to
successive mergers, consolidations, 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(a)(ii) of this Agreement hereof and shall survive
any exercise thereunder.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions of Rights
or to distribute Right Certificates that evidence fractional Rights. In lieu
of such fractional Rights, the Company will pay 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(a),
the current market value of a whole Right will be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day will be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last 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 of Directors
of the Company or, if the rights are not publicly listed or traded, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company will be used.
(b) The Company will not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates that evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company
will pay to the registered holders of Right
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Certificates at the time such Rights are exercised as provided in this
Agreement an amount in cash equal to the same fraction of the current market
value of one Common Share. For purposes of this Section 14(b), the current
market value of a Common Share will be the closing price of a Common Share for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right,
expressly waives all right to receive any fractional Rights or any fractional
Common Shares upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, except the rights
of action given to the Rights Agent under Section 18 of this Agreement, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in its own behalf and for its
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise the Rights 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.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the Right, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal offices of the Rights Agent or at its office in Dallas, Texas,
designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner of
the Right Certificate and of the Rights evidenced by such certificate
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent will be affected by any notice to the
contrary.
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24
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or any 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 or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any other statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right Certificate will be entitled to vote,
receive dividends, or be deemed for any purpose the holder of the Common Shares
or any other securities of the Company that may at any time be issuable on the
exercise of the Rights represented by such Right Certificate, nor will anything
contained in this Agreement 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 Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting of shareholders, 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 of this Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate have
been exercised in accordance with the provisions of this Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent promptly
reasonable compensation for all services rendered by it under this Agreement
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
under this Agreement. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of its duties under this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises, and including any loss, liability or expense incurred through the
Rights Agent's negligence (other than gross negligence).
(b) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered, or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed, and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 of this
Agreement.
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SECTION 19. MERGER, CONSOLIDATION, OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any Person succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, will 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 to
this Agreement, provided that such Person would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21 of this Agreement.
In case at the time such successor Rights Agent succeeds to the agency created
by this Agreement, any of the Right Certificates have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates have not
been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
will have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Right Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any
of the Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement on the following terms and conditions, by all of which the Company
and the holders of Right Certificates (and prior to the Distribution Date, the
holders of the Common Shares), by their acceptance of this Agreement and the
Rights, agree to be bound:
(a) The Rights Agent may consult with legal counsel (which may be
legal counsel for the Company), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) The Rights Agent shall not be deemed to have knowledge of any
fact or matter pertaining to the performance of its duties under this
Agreement, except such facts or matters as are evidenced by records which are
required to be created and maintained by it hereunder, until it shall have been
advised thereof in writing by the Company or by a holder of the Rights.
Whenever in the performance of its duties under this Agreement the Rights Agent
deems it necessary or desirable that any fact or matter (including, without
limitation, the identity of any
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Acquiring Person or the determination of "current per share market price") be
proved or established by the Company prior to taking or suffering any action
under this Agreement, such fact or matter (unless other evidence in respect of
such fact or matter is specifically prescribed in this Agreement) 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, the
Chief Operating Officer, any Vice President, the Treasurer, the Secretary, or
any Assistant Treasurer or Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate will be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable under this Agreement to the
Company and any other Person only for its gross negligence, bad faith, or
willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Summary of Rights or in the Right Certificates (except its countersignature of
the Right Certificates) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the Company
only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution of this Agreement by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except its
countersignature of a Right Certificate); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor will it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount of such adjustment) provided for in
Sections 3, 11, 13 or 23 of this Agreement, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor will it by any
act under this Agreement be deemed to make any representation or warranty as to
the authorization or reservation of any Common Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Common Shares
will, when issued, be validly authorized and issued, fully paid, and
nonassessable, or as to the value of any Common Shares or any Right
Certificate.
(f) The Company agrees that it will perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and delivered all
such further acts, instruments, and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Agreement
from any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, any Vice President, the Secretary, the
Treasurer, or any Assistant Secretary or Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties,
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27
and it will not be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such officer or for any delay in acting
while waiting for such instructions.
(h) The Rights Agent and any shareholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing in this Agreement will preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested in it by this Agreement or perform any duty under this Agreement
either itself or by or through its attorneys or agents, and the Rights Agent
will not be answerable or accountable for any act, default, neglect, or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment of such
attorneys or agents.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice
in writing mailed to the Company and to each transfer agent of the Common
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who will, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, will be (a) a corporation organized and doing business under
the laws of the United States or of the State of Texas or the State of New York
(or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of Texas or the
State of New York), in good standing, having an office in the State of Texas or
the State of New York, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or
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examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$10,000,000, or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence, provided that such controlling corporation fully
guarantees the performance of such Affiliate's duties and obligations
hereunder. After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties, and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent will deliver and transfer to the successor Rights
Agent any property at the time held by it under this Agreement and execute and
deliver any further assurance, conveyance, act, or deed necessary for such
purpose. Not later than the effective date of any such appointment, the
Company will file notice of such appointment in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares, and mail a notice of
such appointment 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 in such notice, will not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Right Certificate to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved by its
Board of Directors 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 the provisions
of this Agreement.
SECTION 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to Section 23(b) of this Agreement and cannot and will not be redeemed
in any other manner.
(b) The Board of Directors of the Company may, at its option, at
any time prior to the Close of Business on the tenth (10th) day following a
Shares Acquisition Date, by Board Approval, redeem all but not less than all of
the then outstanding Rights at the Redemption Price; provided, that the Board
of Directors of the Company may, by Board Approval, reduce or extend the period
during which it may redeem all but not less than all of the Rights so long as
the Rights are redeemable at the time such reduction or extension is adopted.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to Section 23(b) of this
Agreement, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights will be to receive the Redemption Price. Within ten (10) days after
such action of the Board of Directors ordering the redemption of the Rights
pursuant to Section 23(b) of this Agreement, the Company will give written
notice of redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
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29
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice that is mailed in the manner provided in this
Agreement be deemed given, whether or not the holder receives such notice.
Each such notice of redemption will state the method by which the payment of
the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire, or purchase for value any Rights
at any time in any manner other than that specifically set forth in this
Section 23, and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes (i) to pay any dividend payable
in stock of any class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares; (ii) to offer to the holders
of its Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options; (iii) to effect any reclassification of its
Common Shares (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person; (v) to effect the liquidation, dissolution or
winding up of the Company; (vi) to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise), then, in
each such case, the Company will give to each holder of a Right, in accordance
with Section 25 of this Agreement, a notice of such proposed action, which will
specify the record date for the purposes of such stock dividend, distribution
of rights or warrants, the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation in such transactions by the holders of the
Rights, if any such date is to be fixed, and such notice will be so given in
the case of any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Common Shares for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation in such transaction by the holders of the Common Shares,
whichever is earlier.
(b) In case a Trigger Event occurs, then, the Company will, as
soon as practicable thereafter, give to each holder of a Right, in accordance
with Section 25 of this Agreement, a notice of the occurrence of such Trigger
Event, which notice will describe the Trigger Event and the consequences of the
Trigger Event to holders of Rights under Section 11(a)(ii) of this Agreement.
SECTION 25. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right to or on the Company will be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
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Quest Medical, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: President
Subject to the provisions of Section 21 of this Agreement, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right to or on the Rights Agent will be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
MTrust Corp, N.A.
Momentum Place
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Trust Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right will be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company or the Rights Agent.
SECTION 26. SUPPLEMENTS AND AMENDMENTS.
The Company, by Board Approval, and the Rights Agent may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights in order to cure any ambiguity, to correct or supplement any provision
contained in this Agreement that may be defective or inconsistent with any
other provisions in this Agreement, or to make any other provisions in regard
to matters or questions arising under this Agreement that the Company and the
Rights Agent may deem necessary or desirable and that will be consistent with,
and for the purpose of fulfilling, the objectives of the Board of Directors in
adopting this Agreement; provided, however, that following the Distribution
Date, this Agreement shall not be amended in any manner that would adversely
affect the basic economic terms of the Rights; provided, further, that, once
the Rights are no longer redeemable in accordance with Section 23 of this
Agreement, no amendment to this Agreement may have the effect of making the
Rights redeemable.
SECTION 27. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent will bind and inure to the benefit
of their respective successors and assigns hereunder.
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31
SECTION 28. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement will be construed to give to any Person
other than the Company, the Rights Agent, and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy, or claim under this Agreement; but this
Agreement will be for the sole and exclusive benefit of the Company, the Rights
Agent, and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
SECTION 29. SEVERABILITY.
If any term, provision, covenant, or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and will
in no way be affected, impaired, or invalidated.
SECTION 30. GOVERNING LAW.
THIS AGREEMENT AND EACH RIGHT CERTIFICATE ISSUED UNDER THIS AGREEMENT
WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND
FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN
SUCH STATE.
SECTION 31. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts will for all purposes be deemed to be an original, and all
such counterparts will together constitute one and the same instrument.
SECTION 32. DESCRIPTIVE HEADINGS.
Descriptive headings of the several sections of this Agreement are
inserted for convenience only and will not control or affect the meaning or
construction of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the day and year first above written.
ATTEST: QUEST MEDICAL, INC.
By: /s/ XXXXX XXXXX By: /s/ XXXXXX X. XXXXXXXX
---------------------------- ----------------------------
ATTEST: MTRUST CORP, N.A.
By: /s/ XXX X. XXXXXX By: /s/ XXXXX XXXXX
---------------------------- ----------------------------
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EXHIBIT A
FORM OF RIGHT CERTIFICATE
No. R- __________ Rights
NOT EXERCISABLE AFTER OCTOBER 12, 1999 OR
EARLIER IF REDEMPTION OCCURS. THE RIGHTS
ARE SUBJECT TO REDEMPTION AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN SECTION 23
OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
QUEST MEDICAL, INC.
This certifies that __________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner, subject to the terms, provisions, and conditions of the
Rights Agreement, dated as of October 12, 1989 (the "Rights Agreement"),
between Quest Medical, Inc., a Texas corporation (the "Company"), and MTrust
Corp, N.A., a national banking association, (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., Dallas, Texas time, on
October 12, 1999 (unless extended or earlier redeemed by the Company in
accordance with the terms of the Rights Agreement) at the shareholders services
office of the Rights Agent, or at the office of its successor as Rights Agent,
one-half of a fully paid nonassessable share of Common Stock, par value $0.05
per share (the "Common Shares"), of the Company, at a purchase price of $5.00
(the "Purchase Price") per Right, 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 Common Shares
that may be purchased upon exercise of the Rights evidenced by this Right
Certificate) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of October 12, 1989, based on the Common Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of Common Shares 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.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
incorporated in this Right Certificate by reference and made a part of this
Right Certificate for all purposes and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties, and immunities under this Right Certificate of the Rights
Agent, the Company, and the holders of the Right Certificates. Copies of the
Rights Agreement are on file
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at the principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the shareholders services 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 aggregate number
of Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered have entitled such holder to purchase. If this Right
Certificate is exercised in part, the holder will be entitled to receive upon
surrender of this Right Certificate another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $0.01 per Right.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu of such fractional shares, a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company that may at any time be issuable on
the exercise of the Rights evidenced by this Right Certificate, nor will
anything contained in the Rights Agreement or in this Right Certificate be
construed to confer upon the holder of this Right Certificate, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting of shareholders, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate have been exercised as provided in the
Rights Agreement.
This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________, 19__.
ATTEST: QUEST MEDICAL, INC.
______________________________ By: _______________________________
X-0
00
Xxxxxxxxxxxxx:
XXXXXX CORP, N.A.
By:_________________________________________
Authorized Signature
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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 in this
Right Certificate, and does hereby irrevocably constitute and appoint Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ____________________, 19__
__________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
A-4
37
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right represented by the
Right Certificate.)
To: Quest Medical, Inc.
The undersigned hereby irrevocably elects to exercise _________________
(number) Rights represented by this Right Certificate to purchase the Common
Shares issuable upon the exercise of such Rights and requests that certificates
for such Common Shares be issued in the name of:
Please print social security
or other identifying number ____________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights are not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
Please print social security
or other identifying number ____________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated: ____________________, 19__
___________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
A-5
38
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
A-6
39
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF QUEST MEDICAL, INC. COMMON STOCK
On October 12, 1989, the Board of Directors of Quest Medical, Inc.
(the "Company") declared a dividend of one common share purchase right (a
"Right") for each outstanding share of common stock, $0.05 par value (the
"Common Shares"), of the Company. The dividend is payable on October 23, 1989
(the "Record Date") to the shareholders of record at the close of business on
that date. Each Right entitles the registered holder to purchase from the
Company one-half of a share of Common Stock, par value $0.05 per share (the
"Common Shares"), of the Company, at a price of $5.00 (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement dated as of October 12, 1989 (the "Rights Agreement")
between the Company and MTrust Corp, N.A. as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares (an "Acquiring Person") or (ii) 10 days
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of such outstanding
Common Shares (the earlier of such dates being the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached to the certificate.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding even without such notation or a copy of this Summary
of Rights being attached to such Certificate, will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 12, 1999 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
by the Company, in each case, as described below.
X-0
00
Xxx Xxxxxxxx Price payable and the number of Common Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to subscribe for or purchase Common Shares at a price or securities
convertible into Common Shares with a conversion price less than the then
current market price of the Common Shares; or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets or of
subscription rights or warrants (other than those referred to above).
In the event that any person or entity becomes an Acquiring Person
(the beneficial owner of 15% or more of the Common Shares), and one of the
following has occurred: (1) the Company is the surviving corporation in a
merger with an Acquiring Person and the Common Shares are not changed or
exchanged, (2) an Acquiring Persons engages in certain self-dealing
transactions with the Company, (3) any person becomes the beneficial owner of
20% or more of the outstanding Common Shares (unless the event in which such
person acquired 20% or more of the outstanding Common Shares is a Qualifying
Offer or a Permitted Transaction (as such terms are described below)) or (4)
the Company engages in a reclassification or recapitalization that results in
an increase of 1% or more in the Acquiring Person's percentage ownership of the
Company, then proper provision will be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will then
be void), will have the right to receive upon exercise that number of Common
Shares having a market value of two times the applicable exercise price of the
Right.
For the purposes of the Rights Agreement, a Qualifying Offer is an
all-cash tender offer for all of the outstanding securities of the Company that
results in the acquisition of a majority of the outstanding securities of the
Company and meets certain other requirements. A Permitted Transaction is a
stock acquisition or tender or exchange offer pursuant to a definitive
agreement which would result in a person beneficially owning 15% or more of the
Common Shares and which was approved by the Board of Directors (including a
majority of the Directors not in association with an Acquiring Person) prior to
the execution of the agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold, proper provisions will be made so that each holder of a
Right will have the right to receive, upon the exercise of the Right at the
then applicable exercise price, that number of shares of common stock of the
acquiring company that at the time of such transaction will have a market value
of two times the applicable exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and in lieu of
such fractional shares, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
B-2
41
At any time prior to the tenth day following an Acquiring Person's
acquisition of 15% or more of the outstanding Common Shares, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price"). In addition, the Board of
Directors may extend or reduce the period during which the Rights are
redeemable, so long as the Rights are redeemable at the time of such extension
or reduction. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to extend the Final Expiration Date, except that from and after the
Distribution Date no such amendment may adversely affect the economic interests
of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote, or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated October
13, 1989. A copy of the Rights Agreement is available free of charge from the
Company.
B-3
