EXHIBIT 4.1
-----------------------------------
CRYOLIFE, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
RIGHTS AGENT
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
AMENDMENTS EFFECTIVE AS OF NOVEMBER 23, 2005
---------------------------------------
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
THIS FIRST AMENDED AND RESTATED RIGHTS AGREEMENT (as hereby amended and
restated, the "Rights Agreement"), is entered into between CryoLife, Inc., a
Florida corporation (the "Company"), and American Stock Transfer & Trust Company
(the "Rights Agent"), as of the date signed by both parties below, with the
amendments described herein to become effective as of 5:00 p.m. Eastern Standard
Time as of November 23, 2005.
WHEREAS, the Company entered into that certain Rights Agreement (the
"Original Rights Agreement") dated November 27, 1995 with Chemical Mellon
Shareholder Services, L.L.C. ("Chemical");
WHEREAS, the Original Rights Agreement was amended by that certain First
Amendment to Rights Agreement dated effective as of June 1, 1997 between the
Company and the Rights Agent, pursuant to which American Stock Transfer & Trust
Company replaced Chemical as the Rights Agent under the Original Rights
Agreement;
WHEREAS, at a meeting (the "1995 Meeting") of the Board of Directors of the
Company duly called and held on November 27, 1995, the Board of Directors of the
Company authorized and declared a dividend of one right (a "Right") for each
share of Common Stock outstanding on December 11, 1995 (the "First Record
Date"), which Right entitles each share of Common Stock outstanding on the First
Record Date to purchase shares of the Series A Junior Participating Preferred
Stock of the Company, in accordance with and subject to the terms and conditions
the Original Rights Agreement;
WHEREAS, at the 1995 Meeting, the Board of Directors of the Company further
authorized and declared that a Right attach to each share of Common Stock that
becomes outstanding after the First Record Date in accordance with and subject
to the terms and conditions of the Original Rights Agreement,
WHEREAS, on March 15, 2005, the Corporation issued a new series of
preferred stock designated as the "6% Convertible Preferred Stock" having a par
value of $.01 per share (the "Convertible Shares");
WHEREAS, at a meeting (the "2005 Meeting") of the Board of Directors of the
Company duly called and held on November 1, 2005, the Board of Directors
authorized and declared a dividend for Convertible Shares outstanding on
November 23, 2005 (the "Second Record Date"), with each Convertible Share
outstanding as of the Second Record Date being entitled to one Right for each
share of Common Stock into which the Convertible Share is convertible as of the
Distribution Date (as defined in this Rights Agreement), in accordance with and
subject to the terms and conditions of this Rights Agreement;
WHEREAS, at the 2005 Meeting, the Board of Directors of the Company further
authorized and declared that Rights attach to Convertible Shares that become
outstanding after the Second Record Date in accordance with and subject to the
terms and conditions of this Rights Agreement;
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interest of the Company and its stockholders to further amend and
restate the Original Rights Agreement as set forth below;
WHEREAS, Section 27 of the Original Rights Agreement provides that subject
to certain exceptions, the Company and the Rights Agent may supplement or amend
any provision of the Original Rights Agreement without the approval of any
holders of Right Certificates;
WHEREAS, the Board of Directors of the Company has directed that the
Company and the Rights Agent amend and restate the Original Rights Agreement
pursuant to this amendment and restatement, with such amendments to become
effective as of 5:00 p.m. Eastern Standard Time on November 23, 2005.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which shall be the Beneficial Owner (as hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but shall not
include any Exempt Person. Notwithstanding the foregoing,
(i) no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares of
the Company then outstanding; provided, however, that if a Person (other
than an Exempt Person) shall become the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company (other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Shares
2
are treated equally) unless upon becoming the Beneficial Owner of such
additional Common Shares such Person does not beneficially own 15% or more
of the Common Shares outstanding, then such Person shall be deemed to be an
"Acquiring Person";
(ii) if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (A) such Person was
unaware that it would Beneficially Own a percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person" or (B) such
Person was aware of the extent of its Beneficial Ownership of the Common
Shares but was unaware of the consequences of such Beneficial Ownership
under this Rights Agreement) and without any intention of changing or
influencing control of the Company, and such Person, in an orderly fashion
but as promptly as practicable after being advised of such determination,
divests Beneficial Ownership of a sufficient number of Common Shares so
that such Person would no longer be an "Acquiring Person," then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement. In making the determination as to whether a Person who would
otherwise be an "Acquiring Person" has become such inadvertently and
without any intention of changing or influencing control of the Company,
the Board will be entitled to resolve all good faith doubts in a manner
that is against finding inadvertency or lack of intention to change or
influence control. The Board may take into account, but shall not be bound
by, any declarations that any such person may have made on Schedule 13D (or
any comparable or successor report) under the Exchange Act; and
(iii) no Person shall become an "Acquiring Person" who is the
Beneficial Owner of Common Shares of the Company, the Beneficial Ownership
of which was acquired by such Person pursuant to any action or transaction
or series of related actions or transactions approved by the Company's
Board of Directors before such person otherwise became an Acquiring Person.
For all purposes of this Rights Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of
which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Agreement.
3
(b) "Affiliate", and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
(c) Unless otherwise specifically provided, "agreement" refers to both
written and oral agreements.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
is deemed to "beneficially own", directly or indirectly, within the meaning
of Rule 13d-3 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately, contingently, or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing, other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, other rights, warrants or options, or otherwise (in each
case, other than the Rights); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of 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
pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security under this subparagraph (ii) as a result of
any agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (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 promulgated under the Exchange Act and the
rules and regulations promulgated pursuant thereto, and (2) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such first-mentioned Person or any of such
first-mentioned Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing, other than
customary agreements with and between underwriters and selling group
4
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso to Section 1(d)(ii)(B) above) or disposing of any securities of
the Company;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" as defined in this Section 1(d), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director
or employee of an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to beneficially own hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in Georgia or the city in which the principal
office of the Rights Agent is located are authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 p.m., Atlanta,
Georgia time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Atlanta, Georgia time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or, in the case of an unincorporated entity, equivalent
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii).
(i) "Convertible Shares" shall have the meaning set forth in the Recitals.
(j) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d)(i).
(k) "Current Value" shall have the meaning set forth in Section 11(a)(iii).
5
(l) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(m) "Eligible Shares" shall mean Common Shares and/or Convertible Shares
that, pursuant to the 1995 meeting, the 2005 meeting, and the terms of this
Agreement, are entitled to Rights.
(n) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "Exchange Date" shall mean the time at which the Rights are exchanged
as provided in Section 24 hereof.
(q) "Exchange Ratio" shall have the meaning set forth in Section 24(a).
(r) "Exempt Person" shall mean the Company, any Subsidiary (as hereinafter
defined) of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or pursuant
to the terms of any such plan.
(s) "Expiration Date" mean the earlier of the Redemption Date, the Final
Expiration Date or the Exchange Date.
(t) "First Record Date" shall have the meaning set forth in the Recitals.
(u) "Flip-In Event" shall have the meaning set forth in Section 11(a)(ii).
(v) "Final Expiration Date" shall mean the Close of Business on November
23, 2015.
(w) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.
(x) "Person" shall mean any individual, firm, corporation, limited
liability company, partnership, limited partnership, trust, or other entity, and
shall include any successor (by merger or otherwise) of such entity.
6
(y) "Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the Form of Articles of Amendment attached to this
Agreement as Exhibit A.
(z) "Principal Party" shall have the meaning set forth in Section 13(b).
(aa) "Purchase Price" shall have the meaning set forth in Section 7(b).
(bb) "Record Date" shall mean the First Record Date, with respect to the
Common Shares, and the Second Record Date, with respect to the Convertible
Shares.
(cc) "Redemption Date" shall mean the time at which the Rights are redeemed
as provided in Section 23 hereof.
(dd) "Redemption Price" shall have the meaning set forth in Section 23(a).
(ee) "Right" shall have the meaning set forth in the Recitals.
(ff) "Rights Agent" shall have the meaning set forth in the Recitals and
shall include any Person that shall become a successor Rights Agent pursuant to
the terms of this Agreement.
(gg) "Right Certificate" shall have the meaning set forth in Section 3.
(hh) "Second Record Date" shall have the meaning set forth in the Recitals.
(ii) "Securities Act" shall mean the Securities Act of 1933, as amended.
(jj) "Security" shall have the meaning set forth in Section 11(d).
(kk) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such;
provided, that if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares Acquisition Date shall be
deemed to occur.
(ll) "Spread" shall have the meaning set forth in Section 11(a)(iii).
7
(mm) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(nn) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(oo) "Summary of Rights" shall have the meaning set forth in Section 3(b).
(pp) "Trading Day" shall have the meaning set forth in Section 11(d)(i).
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,
in accordance with Section 3 hereof, shall prior to the Distribution Date be the
holders of the Eligible Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable upon ten days' written notice to the Rights Agent and any other
co-Rights Agents. The Rights Agent shall have no duty to supervise, and in no
event shall be liable for, the acts or omission of any such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth Business
Day after the Shares Acquisition Date, or (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
of, or of the first public announcement of the intention of any Person (other
than an Exempt Person) to commence, a tender or exchange offer the consummation
of which would result in any Person becoming an Acquiring Person (the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b)) by the
certificates for the Eligible Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the Rights will be transferable only
in connection with the transfer of the Eligible Shares. In the case of
uncertificated shares of Eligible Shares, the Rights will be evidenced by the
book entry account that evidences record ownership of such shares. With respect
to certificated Eligible Shares, 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 (or the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail, to each record
holder of the Eligible Shares 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, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing (x) with respect to the holders of Common Shares, one
8
Right for each Common Share so held, subject to adjustment as provided herein
or, (y) with respect to holders of Convertible Shares, one Right for each Common
Share into which a Convertible Share is convertible as of the Distribution Date.
As of the Distribution Date and thereafter, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Second Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Eligible 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 Eligible 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 thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or if earlier, the Expiration Date), the surrender for
transfer of any certificate for Eligible Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Eligible Shares
represented thereby.
(c) Certificates for Eligible Shares which are issued and become
outstanding (including, without limitation, upon transfer of outstanding
Eligible Shares, disposition of Eligible Shares out of treasury stock, or
issuance or reissuance of Eligible Shares out of authorized but unissued shares)
after the Second Record Date but prior to the earlier of the Distribution Date
or the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in the First Amended and Restated Rights Agreement
between CryoLife, Inc. and American Stock Transfer & Trust Company, amended
effective as of November 23, 2005, as the same may be amended from time to
time (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal office
of CryoLife, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may be evidenced by
separate certificates and will no longer be evidenced by this certificate.
CryoLife, Inc. will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge after
receipt of a written request therefor. Under certain circumstances set
9
forth in the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder,
may become null and void.
Certificates for Eligible Shares issued after the First Record Date and prior to
the Second Record Date shall have the legend required under the Original Rights
Agreement, and the reference in such legend to the Rights Agreement dated
November 27, 1995, shall be deemed to include the amendments subsequently made
thereto. In the event that the Company purchases or acquires any Eligible Shares
after the Record Date but prior to the Distribution Date, any Rights associated
with such Eligible Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Section 3A. Termination of Rights of Acquiring Person, Etc. Notwithstanding
anything in this Rights Agreement to the contrary, from and after a Flip-In
Event, any Rights that are beneficially owned or acquired by (w) an Acquiring
Person (or any Affiliate or Associate of an Acquiring Person), (x) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the Flip-In Event, (y) a transferee of any Acquiring Person (or
any Affiliate or Associate) who becomes a transferee prior to or concurrently
with a Flip-In Event pursuant to either (I) a transfer (whether or not for
consideration) from the Acquiring Person to holders of its equity securities or
to any Person with whom it has a continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which the
Board of Directors has determined is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the provisions of this
paragraph, or (z) any subsequent transferees of such Persons, shall be null and
void without any further action, and any holder of any such Right shall, after
the occurrence of the Flip-In Event, have no rights whatsoever with respect to
such Rights under any provision of this Agreement. The Company shall use
reasonable efforts to ensure that the provisions of this Section 3A are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its making or failing to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder or taking or failing to take any actions with respect to any Rights or
Rights Certificate of any such Person. From and after the Flip-In Event, no
Rights Certificate shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the provisions
of this paragraph; and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be cancelled.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially in the form as Exhibit B hereto
10
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of this Agreement, the Right Certificates, whenever issued, shall
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set forth therein at the Purchase Price, but the
number of one one-hundredths of a Preferred Share and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease 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 person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at an office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on 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 this Agreement, at any time after the
Close of Business on the Distribution Date, and prior to the Close of Business
on the Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to Section
3A hereof or that have been exchanged pursuant to Section 24 hereof) may be
11
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-hundredths of a Preferred Share 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 shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall, subject to Sections 7(e) and 14
hereof, countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company 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 thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
(c) Notwithstanding any other provisions hereof, the Company and the Rights
Agent may amend this Agreement to provide for uncertified Rights in addition to
or in place of Rights evidenced by Right Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Prior to the Distribution Date, none of the Rights shall be
exercisable. Except as otherwise provided herein, the registered holder of any
Right Certificate evidencing exercisable Rights (excluding an Acquiring Person
as set forth in Section 3A) may exercise the Rights evidenced thereby, in whole
or in part, at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and related certification
properly completed and duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each Right being exercised and an amount equal to any tax or charges
required to be paid by the holder of such Rights Certificate in accordance with
Section 9 hereof in cash, or by certified check, wire transfer or bank draft
payable to the order of the Company, at or prior to the Expiration Date.
12
(b) Initially, the "Purchase Price" shall be $33.33 for each one
one-hundredth of a Preferred Share purchasable upon exercise of a Right. The
Purchase Price and the number of one one-hundredth of a Preferred Share or other
securities or property to be acquired upon exercise of a Right shall be subject
to adjustment from time to time as provided in Section 11 or 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase and certification properly completed and duly executed, accompanied by
payment as provided in Section 7(a) hereof, the Rights Agent shall, subject to
Section 20(j) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depository agent, requisition from the depositary agent
depositary receipts representing such Preferred Shares as are to be purchased
(in which case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the depositary agent to comply with such request,
(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
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
13
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use reasonable efforts to
cause to be reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7.
(b) So long as the Preferred Shares issuable upon the exercise of Rights
are to be listed or admitted to trading on any national securities exchange, or
included for quotation on any transaction reporting system, the Company
covenants and agrees to use reasonable efforts to cause, during the period from
the Distribution Date to the Expiration Date, all shares reserved for such
issuance to be listed on such securities exchange or included for quotation on
any such transaction reporting system, upon official notice of issuance upon
such exercise.
(c) From and after such time as the Rights become exercisable, the Company
shall use reasonable efforts, if then necessary to permit the issuance of
Preferred Shares upon exercise of the Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities or
"blue sky" laws (to the extent exemptions therefrom are not available), cause
such registrations and qualifications to become effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the earlier of
the date as of which the Rights are no longer exercisable for such securities
and the Expiration Date. The Company may temporarily suspend for a period of
time not to exceed 90 calendar days, the exercisability of the Rights in order
to prepare and file a registration statement under the Securities Act and permit
such registration statement to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and shall issue a further public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision herein to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
14
jurisdiction shall have been obtained and until a registration statement under
the Securities Act shall have been declared effective, unless an exemption
therefrom is available.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable shares.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of Right Certificates or of any
Preferred Shares or Common Shares or other securities upon the exercise of the
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates for the Preferred Shares or Common Shares or other securities,
as the case may be, in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or exchange or to
issue or deliver any certificates for Preferred Shares or Common Shares or other
securities, as the case may be, upon the exercise or exchange of any Rights
until any such tax shall have 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.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby at the Close of Business on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares at the Close of Business on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Shares transfer books of
the Company are open; provided, however, that if delivery of the Preferred
Shares is delayed by reason of a suspension pursuant to Section 9(c) hereof,
such Persons shall be deemed to have become the record holders of such Preferred
Shares only when such Preferred Shares first become deliverable. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the right to
15
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or other securities
or property purchasable upon exercise of 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 shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable upon exercise of a Right on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company
were open, the holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person (the first occurrence of such event being
referred to as the "Flip-In Event"), then each holder of a Right, except as
otherwise provided in Section 3A and Section 11(a)(iii), shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exerciseable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exerciseable
and (y) dividing that product by 50% of the then Current Per Share Market
Price of the Common Shares of the Company (determined pursuant to Section
11(d) hereof) on the date of such Flip-In Event; provided, however, that
16
the Purchase Price (as so adjusted) and the number of Common Shares so
receivable upon exercise of a Right shall, following the Flip-In Event, be
subject to further adjustment as appropriate in accordance with Section
11(f) hereof. From and after the occurrence of an event specified in 13(a)
hereof, any Rights that theretofore have not been exercised pursuant to
this Section 11(a)(ii) shall thereafter be exercisable only in accordance
with Section 13 and not pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the
Company is a party, (A) determine the excess of (1) the value of the Common
Shares issuable upon the exercise of a Right in accordance with the
foregoing paragraph (ii) (the "Current Value") over (2) the Purchase Price
as adjusted in accordance within the foregoing subparagraph (ii) (such
excess is herein referred to as the "Spread"), and (B) with respect to each
Right (other than Rights which have become void pursuant to the foregoing
subparagraph (ii)), make adequate provision to substitute for the Common
Shares issuable in accordance with the foregoing subparagraph (ii), upon
the exercise of the Rights and payment of the applicable Purchase Price as
adjusted in accordance therewith, (1) cash, (2) a reduction in such
Purchase Price, (3) Preferred Shares or other equity securities of the
Company (including, without limitation, shares, or fractions of shares, of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to Common Shares, are deemed in good faith
by the Board of Directors of the Company to have substantially the same
value as shares of Common Stock (such shares of preferred stock are herein
referred to as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of any, some or all of the
foregoing, having an aggregate value equal to the Current Value (less the
amount of any reduction in the Purchase Price), where such aggregate value
has been determined by the Board of Directors of the Company upon the
advice of a nationally recognized investment banking firm selected in good
faith by the Board of Directors of the Company; provided, however, if the
Company shall not make adequate provision to deliver value pursuant to
clause (B) above within 30 days following the Flip-In Event, then the
Company shall be obligated to deliver, to the extent permitted by
applicable law and any material agreements then in effect to which the
Company is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares of the Company (to
the extent available) and then, if necessary, such number or fractions of
Preferred Shares (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If,
upon the occurrence of a Flip-In Event, the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, then, if the Board of Directors so elects,
the 30-day period set forth above may be extended to the extent necessary,
but not more than 90 days after the date of the Flip-In Event, in order
that the Company may seek shareholder approval for the authorization of
such additional shares (such 30-day period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii), that
17
such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant
to such second sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the Common
Shares shall be the Current Per Share Market Price (as determined pursuant
to Section 11(d)(i)) on the date of the Flip-In Event and the per share or
fractional value of any Common Stock Equivalents shall be deemed to equal
the Current Per Share Market Price of the Common Shares. The Board of
Directors of the Company may, but shall not be required to, establish
procedures to allocate the right to receive Common Shares upon exercise of
the Rights among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("Equivalent Preferred Shares")) or
securities convertible into Preferred Shares or Equivalent Preferred Shares at a
price per Preferred Share or Equivalent Preferred Share (or having a conversion
price per share, if a security convertible into Preferred Shares or Equivalent
Preferred Shares) less than the then Current Per Share Market Price of the
Preferred Shares (determined pursuant to Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
and Equivalent Preferred Shares outstanding on such record date plus the number
of Preferred Shares and Equivalent Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or Equivalent Preferred Shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Preferred Shares and
Equivalent Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
18
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall 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. Preferred Shares and Equivalent Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then Current Per Share Market Price of the Preferred Shares
(determined pursuant to Section 11(d)) on such record date, less the fair market
value (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) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such Current Per Share
Market Price (determined pursuant to Section 11(d)) of the Preferred Shares;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "Current Per Share Market Price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on any date shall
be deemed to be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is hereinafter
defined) 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 the announcement by the issuer of such Security
19
of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to
the expiration of 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 shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, 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 on NASDAQ or 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.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is not listed
or admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the Preferred
Shares are publicly traded, the "Current Per Share Market Price" of the
Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly traded
but the Common Shares are publicly traded, the "Current Per Share Market
Price" of the Preferred Shares shall be conclusively deemed to be no more
than the Current Per Share Market Price of the Common Shares as determined
pursuant to Section 11(d)(i) multiplied by 100 (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction with respect
to shares of Common Stock of the Company occurring after the date hereof),
with such adjustment to such price as is determined in good faith by the
Board of Directors to take into account the differences between Common
Shares and Preferred Shares (including, without limitation, differences in
20
voting rights). If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "Current Per Share Market Price"
shall mean the fair value per share 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.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten millionth of a
Preferred Share or one ten thousandth of a Common Share or any other share or
security as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares,
thereafter the Purchase Price and the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a), 11(b), 11(c), 11(e),
11(h), and 11(m) hereof, as applicable, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Preferred Shares shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price pursuant to Sections 11(b) or 11(c) hereof to adjust the number
of Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such adjustment. Each
21
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company may, 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 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise of
a Right, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Preferred Shares or any
other shares of capital stock issuable upon exercise of a Right, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable Preferred Shares or other such shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event issuing
to the holder of any Right exercised after such record date of the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
22
upon such exercise over and above the Preferred 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 shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in each such case, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. The Company agrees that, after the earlier of the
Distribution Date or the Shares Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit any subsidiary to
take) any action if at any time such action is taken it is reasonably
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall 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, the
Convertible Shares, and the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
23
with Section 25 hereof (if so required under Section 25 hereof). The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, directly or indirectly, at any time after the
Flip-In Event, (i) the Company shall consolidate with, or merge into, any other
Person, (ii) any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), 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
shall be made so that: (A) each holder of a Right (other than Rights which have
become void pursuant to Section 3A hereof) shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price, in
accordance with the terms of this Agreement and in lieu of Preferred Shares or
Common Shares of the Company, such number of validly authorized and issued,
fully paid, non-assessable and freely tradable Common Shares of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by dividing the then current Purchase Price by 50% of the
then Current Per Share Market Price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; provided, however, that the then
current Purchase Price and the number of Common Shares of such Principal Party
so receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Shares of the Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (B) such Principal
Party shall thereafter be liable for, and shall 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" shall thereafter be
deemed to refer to such Principal Party; and (D) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; provided that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash, shares, rights,
24
warrants and other property which such holder would have been entitled to
receive had such holder, at the time of the transaction, owned Common Shares of
the Principal Party receivable upon exercise of a Right pursuant to this Section
13(a), and such Principal Party shall take such steps (including, but not
limited to reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants, and other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (i) or (ii) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer
of the securities into which the Common Shares of the Company are converted
in such merger or consolidation, or, if there is more than one such issuer,
the issuer the Common Shares of which have the greatest aggregate market
value of shares outstanding, or (B) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the Common
Shares of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in (iii) of the first
sentence of Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons is the issuer of Common Shares having the greatest aggregate
market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Shares of such Person is not at such time or
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding,
25
or (3) if 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 clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and 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 Expiration
Date and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Shares of the Principal Party
shall be listed or admitted to trading on the New York Stock Exchange or on
another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Shares of the Principal Party shall not be
listed or admitted to trading on the New York Stock Exchange or a national
securities exchange, to cause the Rights and the securities receivable upon
exercise of the Rights to be authorized for quotation on NASDAQ or on such
other system then in use;
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act;
and
26
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Shares of the Principal Party subject to
purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or Common Stock
Equivalents of such Principal Party at less than the then Current Market Price
Per Share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Shares or Common Stock Equivalents
of such Principal Party at less than such then current market price, or (ii)
providing for any special payment, tax or similar provision in connection with
the issuance of the Common Shares of such Principal Party pursuant to the
provisions of Section 13, then, in such event, the Company hereby agrees with
each holder of Rights that it shall not consummate any such transaction unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after
the Flip-In Event, enter into any transaction of the type described in clauses
(i) through (iii) of Section 13(a) hereof if (i) at the time of or immediately
after such consolidation, merger, sale, transfer or other transaction there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such consolidation, merger, sale,
transfer or other transaction, the stockholders of the Person who constitutes,
or would constitute, the Principal Party for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
27
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed 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 NASDAQ or 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. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Company shall
be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share upon the exercise or exchange of Rights.
Interests in fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share (as determined in accordance with Section 14(a)
hereof) for the Trading Day immediately prior to the date of such exercise or
exchange.
(c) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares upon the
exercise or exchange of Rights. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right Certificates with
28
regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of one
Common Share (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Eligible Shares); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of the Eligible 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 Eligible Shares), may, on his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
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 same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Eligible Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
agency of the Rights Agent 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 Eligible
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
29
Right Certificates or the Eligible Share certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to Section 7(e), shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed, for any purpose, the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise or
exchange of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company, or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive dividends or
other distributions or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or 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 hereof.
(b) The Company agrees to indemnify and to hold the Rights Agent harmless
against any loss, liability, damage or expense (including reasonable fees and
expenses of legal counsel) which the Rights Agent may incur resulting from its
actions as Rights Agent pursuant to this Rights Agreement; provided, however,
that the Rights Agent shall not be indemnified or held harmless with respect to
any such loss, liability, damage or expense incurred by the Rights Agent as a
result of, or arising out of, its own negligence, bad faith or willful
30
misconduct. In no case shall the Company be liable with respect to any action,
proceeding, suit or claim against the Rights Agent unless the Rights Agent shall
have notified the Company, by letter or by facsimile confirmed by letter, of the
assertion of any action, proceeding, suit or claim against the Rights Agent,
promptly after the Rights Agent shall have notice of any such assertion of an
action, proceeding, suit or claim or have been served with the summons or other
first legal process giving information as to the nature and basis of the action,
proceeding, suit or claim. The Company shall be entitled to participate at its
own expense in the defense of any such action, proceeding, suit or claim, and,
if the Company so elects, the Company shall assume the defense of any such
action, proceeding, suit or claim. In the event that the Company assumes such
defense, the Company shall not thereafter be liable for the fees and expenses of
any additional counsel retained by the Rights Agent, so long as the Company
shall retain counsel satisfactory to the Rights Agent, in the exercise of its
reasonable judgment, to defend such action, proceeding, suit or claim. The
Rights Agent agrees not to settle any litigation in connection with any action,
proceeding, suit or claim with respect to which it may seek indemnification from
the Company without the prior written consent of the Company.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
31
name; and in all such cases such Right Certificates shall 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 upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall 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) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall 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 shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 3A hereof) or any adjustment in the
terms of the Rights provided for in Section 3, 11, 13, 23 or 24, 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 receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
32
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice-President, the Secretary or the Treasurer of the Company, and it shall
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 those instructions.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be 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 thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or the form of election to purchase, as
the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise, transfer,
split up, combination or exchange, without first consulting the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares, the Convertible Shares, or Preferred Shares by registered
33
or certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares, Convertible Shares, or Preferred Shares by
registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, 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, shall be a corporation organized and doing business under the laws
of the United States or the laws of any state of the United States or the
District of Columbia, in good standing, having an office in the State of New
York, Pennsylvania or Florida, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and following the Distribution Date, mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
purchasable under the Rights Certificate made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the Expiration Date,
the Company (A) shall, with respect to Common Shares of the Company so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities, notes
or debentures issued by the Company currently outstanding or issued at any time
34
in the future by the Company, and (B) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that such issuance or this sentence would create a significant risk
of or result in a material adverse tax consequences to the Company or the Person
to whom such Right Certificate would be issued or would create a significant
risk of or result in such options, or employee plans, or arrangements failing to
qualify for otherwise available special tax treatment, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustments
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at any time prior to the
Flip-In Event, redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring in respect of the Common
Shares after the date hereof (such redemption price being hereinafter referred
to as the "Redemption Price"). The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Company, at its option, may pay the Redemption Price either in cash or in Common
Shares, or such other form of consideration the Board of Directors of the
Company shall determine.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 Business Days after the action
of the Board of Directors ordering the redemption of the Rights (or such later
time as the Board may establish for the effectiveness of such redemption), the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Eligible Shares. Any notice which is mailed
35
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder of Rights received such notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after the Flip-In Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 3A hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring in respect of
the Common Shares after the date hereof (such amount per Right being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of the Rights so exchanged at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 3A
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize
such additional Common Shares, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exchange of a Right, a number of
Preferred Share (or Equivalent Preferred Shares) or fraction thereof such that
36
the Current Per Share Market Price of one Preferred Share (or Equivalent
Preferred Shares) multiplied by such number or fraction is equal to the Current
Per Share Market Price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Shares Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision or combination of
outstanding Preferred 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, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such dividend or
offering of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares of the
Company and/or Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) or Section 13 hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of Eligible Shares), in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.
37
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate (or,
prior to the Distribution Date, of the Eligible Shares) to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
CryoLife, Inc.
Xxxxx 000
0000 Xxx Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Shares) to
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Corporate Vice President
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 Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Rights, by action of its board of directors in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder, or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable, including, without limitation, to change the Purchase Price, the
Redemption Price, any time periods herein specified, and any other term hereof,
any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent. Notwithstanding anything to the contrary herein,
from and after the earlier of (a) such time as any Person becomes an Acquiring
Person, or (b) the Distribution Date, this Agreement shall not be amended in any
38
manner which would adversely affect the interests of the holders of Rights
(other than the interests of an Acquiring Person or an Affiliate or Associate of
an Acquiring Person).
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Eligible Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Eligible Shares).
Section 30. Determinations and Actions by the Board of Directors. The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend or not amend this
Agreement. All such actions, calculations, interpretations and determinations
that are done or made by the Board of Directors of the Company in good faith
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Florida 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.
39
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
CRYOLIFE, INC.
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
40
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions...............................................................2
-------------------
Section 2. Appointment of Rights Agent.......................................................8
---------------------------
Section 3. Issue of Right Certificates.......................................................8
---------------------------
Section 3A Termination of Rights of Acquiring Person, Etc...................................10
-----------------------------------------------
Section 4. Form of Right Certificates.......................................................10
--------------------------
Section 5. Countersignature and Registration................................................11
---------------------------------
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
-------------------------------------------------------------------
Mutilated, Destroyed, Lost or Stolen Right Certificates......................11
-------------------------------------------------------
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................12
-------------------------------------------------------------
Section 8. Cancellation and Destruction of Right Certificates...............................14
--------------------------------------------------
Section 9. Availability of Preferred Shares.................................................14
--------------------------------
Section 10. Preferred Shares Record Date....................................................15
----------------------------
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..............16
------------------------------------------------------------------
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................23
----------------------------------------------------------
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............24
--------------------------------------------------------------------
i
PAGE
Section 14. Fractional Rights and Fractional Shares.........................................27
---------------------------------------
Section 15. Rights of Action................................................................29
----------------
Section 16. Agreement of Right Holders......................................................29
---------------------------
Section 17. Right Certificate Holder Not Deemed a Stockholder...............................30
-------------------------------------------------
Section 18. Concerning the Rights Agent.....................................................30
---------------------------
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................31
---------------------------------------------------------
Section 20. Duties of Rights Agent..........................................................32
----------------------
Section 21. Change of Rights Agent..........................................................33
----------------------
Section 22. Issuance of New Right Certificates..............................................34
----------------------------------
Section 23. Redemption......................................................................35
----------
Section 24. Exchange........................................................................36
--------
Section 25. Notice of Certain Events........................................................37
------------------------
Section 26. Notices.........................................................................38
-------
Section 27. Supplements and Amendments......................................................38
--------------------------
Section 28. Successors......................................................................39
----------
Section 29. Benefits of this Agreement......................................................39
--------------------------
Section 30. Determinations and Actions by the Board of Directors............................39
----------------------------------------------------
ii
PAGE
Section 31. Severability....................................................................39
------------
Section 32. Governing Law...................................................................39
-------------
Section 33. Counterparts....................................................................40
------------
Section 34. Descriptive Headings............................................................40
--------------------
EXHIBIT A...................................................................................A-1
---------
EXHIBIT B...................................................................................B-1
---------
EXHIBIT C...................................................................................C-1
---------
iii
EXHIBIT A
TERMS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CRYOLIFE, INC
------------------
"(c) There shall be a series of Preferred Stock, par value $.01 per share, of
the Corporation with the following designated number of shares, relative rights,
preferences, and limitations thereof:
(1) Designation and Amount. The shares of such series shall be designated
as "Series A Junior Participating Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A Preferred Stock shall
be two million (2,000,000) shares of the five million (5,000,000) authorized
preferred shares. The two million (2,000,000) Series A Preferred Stock shares
shall be reserved for issuance in connection with the exercise of certain rights
granted pursuant to a First Amended and Restated Rights Agreement, amended
effective as of November 23, 2005, by and between the Corporation and American
Stock Transfer & Trust Company, as Rights Agent thereunder. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
(2) Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 10 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
A-1
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time after
issuance of Series A Preferred Stock declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
A-2
(3) Voting Rights. The holders of shares of Series A Preferred Stock shall
have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time after issuance of Series A Preferred
Stock declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share
to which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other document or filing
creating a series of Preferred Stock or any similar stock, or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
(4) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in subparagraph 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
A-3
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this
subparagraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
(5) Reacquired Shares. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other document or filing creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
(6) Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $1.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time after issuance of Series A Preferred
Stock declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
A-4
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(7) Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of common stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event. In the event both this subparagraph 7 and subparagraph 2 appear to apply
to a transaction, this subparagraph 7 will control.
(8) No Redemption; No Sinking Fund. The shares of Series A Preferred Stock
shall not be redeemable; provided, however, that the Corporation may purchase or
otherwise acquire outstanding shares of Series A Preferred Stock in the open
market or by offer to any holder or holders of shares of Series A Preferred
Stock. The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
(9) Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock, unless the Board of Directors
shall specifically determine otherwise in fixing the powers, preferences, and
relative, participating, optional and other special rights of the shares of such
series and the qualifications, limitations and restrictions thereof.
A-5
(10) Fractional Shares. The Series A Preferred Stock shall be issuable upon
exercise of the Rights issued pursuant to the Rights Agreement in whole shares
or in any fraction of a share that is one one-hundredth of a share or any
integral multiple of such fraction which shall entitle the holder, in proportion
to such holders fractional shares, to receive dividends, exercise voting rights,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock. In lieu of fractional shares, the
Corporation, prior to the first issuance of a share or a fraction of a share of
Series A Preferred Stock, may elect (1) to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-hundredth of a
share or any integral multiple thereof or (2) to issue depository receipt
evidencing such authorized fraction of a share of Series A Preferred Stock
pursuant to an appropriate agreement between the Corporation and a depository
selected by the Corporation; provided that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges and
preferences to which they are entitled as holders of the Series A Preferred
Stock.
(11) Amendment. These Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class."
A-6
EXHIBIT B
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER NOVEMBER 23, 2015 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED
BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF BECOME
NULL AND VOID AND ARE NO LONGER TRANSFERABLE.
Right Certificate
CRYOLIFE, INC.
This certifies that _______________________ or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the First Amended and Restated Rights Agreement, amended effective as of
November 23, 2005 as the same may be amended from time to time (the "Rights
Agreement"), between, CryoLife, Inc., a Florida corporation (the
"Company"), and American Stock Transfer & Trust Company, as Rights Agent,
(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., Atlanta, Georgia time, on November 23, 2015 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Shares"), of the Company, at a purchase price of $33.33 per
one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a Preferred
B-1
Share which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of
November 23, 2005, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a Preferred Share (or other securities or
property) which may be purchased upon the exercise of the Rights and the
number of 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 hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the
Rights Agent. The Company will mail to the holder of this Rights
Certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preferred Shares as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.001 per Right or (ii) may be exchanged in whole or in
part for Preferred Shares or shares of the Company's Common Stock, par
value $.01 per share.
B-2
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise or exchange hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised or
exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________, 2___.
ATTEST: CRYOLIFE, INC.
By:
------------------------------------ ---------------------------
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:
---------------------------------
Authorized Signature
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________ hereby sells, assigns and
transfers unto _______________________
___________________________________________________________________________
(Please print name and address of transferee)
_______________________ Rights represented by this Right Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint _______________________________________
Attorney, to transfer said Rights on the books of the within-named Company,
with full power of substitution.
Dated: _______________________
___________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized guarantee
medallion program.
______________________________________________
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
___________________________
Signature
B-4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: CryoLife, Inc.
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Right Certificate to
purchase the Preferred Shares (or other securities or property) issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares (or other securities) be issued in the name of:
Please insert social security
or other identifying number
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
Dated: _______________________
_____________________________
Signature
B-5
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized guarantee
medallion program.
Form of Reverse Side of Right Certificate -- continued
_______________________
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, and were not acquired by
the undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
_____________________________
Signature
_______________________
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, 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.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner
of the Rights evidenced by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and such Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF BECOME
NULL AND VOID AND ARE NO LONGER TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Background. On November 27, 1995, CryoLife, Inc. (the "Company") entered
into a Rights Agreement (the "Original Rights Agreement") with Chemical Mellon
Shareholder Services ("Chemical"). Chemical was subsequently replaced by
American Stock Transfer & Trust Company as the rights agent under the Original
Rights Agreement (the "Rights Agent").
As of November __, 2005, the Company and the Rights Agent entered into the
First Amended and Restated Rights Agreement (as the same may be amended from
time to time, the "Rights Agreement"), which amended and restated the Original
Rights Agreement effective as of 5:00 p.m. Eastern Standard Time on November 23,
2005. The Original Rights Agreement was amended to extend the termination date
thereof until November 23, 2015 and to making other changes. The rights to
purchase Preferred Shares and other rights granted under the Rights Agreement
are summarized below.
Eligible Shares. Each share of common stock, par value $.01 per share (the
"Common Shares"), of the Company outstanding on December 11, 1995 (the "First
Record Date"), is entitled to one right (a "Right"), as defined in and subject
to the terms and conditions of the Rights Agreement. Under the Rights Agreement,
a Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company at a price of
$33.33 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. Each share of Common Stock that becomes outstanding after
the First Record Date is also entitled to a Right, subject to the terms and
conditions of the Original Rights Agreement.
C-1
Each share of 6% Convertible Preferred Stock, par value $.01 per share (the
"Convertible Shares") of the Company outstanding on November 23, 2005 (the
"Second Record Date"), is entitled to one Right for each share of Common Stock
into which the Convertible Share is convertible as of the Distribution Date (as
defined in the Rights Agreement), subject to the terms and conditions of the
Rights Agreement. Each Convertible Share that becomes outstanding after the
Second Record Date is also entitled to a Right, subject to the terms and
conditions of the Rights Agreement.
Rights Prior to a Distribution Date. The Rights are evidenced by such
certificates for Eligible Shares (or by book entry account with respect to
uncertificated Eligible Shares) until the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (with certain exceptions, an "Acquiring Person") have
acquired beneficial ownership of 15% or more of the outstanding Common Shares or
(ii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) 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 15% or more of the outstanding Common Shares (the earlier of such dates
being called the "Distribution Date").
Until the Distribution Date (or earlier redemption, exchange, or expiration
of the Rights), the Rights will be transferred with and only with the Eligible
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Eligible Share certificates issued after the Record Date upon
transfer or new issuance of Eligible Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption, exchange, or expiration of the Rights), the surrender for
transfer of any certificates for Eligible Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Eligible Shares represented by such certificate.
Rights Owned by an Acquiring Person (defined above) Become Void on the
Distribution Date. The Rights entitle holders to acquire company securities
under defined circumstances after the Distribution Date. Rights beneficially
owned by an Acquiring Person (and its Affiliates, Associates, and transferees
(collectively, the "Acquiring Persons")), however, become void from and after
the time such persons become Acquiring Persons, and Acquiring Persons have no
rights whatsoever under the Rights Agreement. The benefits of the Rights held by
shareholders that are not Acquiring Persons and that are not so voided are
described below. All references to Rights that follow refer only to Rights held
by persons who are not Acquiring Persons.
C-2
Rights After a Distribution Date; Expiration. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Eligible
Shares as of the close of business on the Distribution Date and such separate
Right Certificates will evidence the Rights. The Rights are not exercisable
until the Distribution Date. The Rights will thereafter alone expire on November
23, 2015 (the "Final Expiration Date"), unless the Final Expiration Date is
advanced or extended or unless the Rights are earlier redeemed or exchanged by
the Company, in each case, as described below. Until a Right is exercised, the
Right confers no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The Rights entitle holders to purchase Preferred Shares in certain
circumstances. The Purchase Price payable, and the number of Preferred 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 Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
referred to above). The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
Description of Preferred Shares Purchasable Upon Exercise of Rights.
Preferred Shares purchasable upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled, when, as and if declared, to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be entitled
to a minimum preferential liquidation payment of $1.00 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
C-3
Because of the nature of the Preferred Shares, dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
Alternative Ability to Exercise Rights to Purchase for Common Shares at
Discount to Market Price. In the event that any person or group becomes an
Acquiring Person, each holder of a Right will thereafter have the right to
receive upon exercise of a Right, and in lieu of Preferred Shares, that number
of Common Shares having a market value of two times the exercise price of the
Right.
Alternative Ability to Exercise Right After Sale of the Company. In the
event that, after a person or group has become an Acquiring Person, 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 provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise of a Right, and in lieu of Preferred Shares or Common Shares
of the Company, that number of shares of common stock of the person with whom
the Company has engaged in the foregoing transaction (or its parent) that at the
time of such transaction will have a market value of two times the exercise
price of the Right.
Company Ability to Exchange Rights for Common Shares. At any time after any
person or group becomes an Acquiring Person and prior to the acquisition by any
person or group of 50% or more of the outstanding Common Shares, the Board of
Directors of the Company may exchange the Rights, in whole or in part, at an
exchange ratio of one Common Share, or a fractional share of Preferred Shares
(or other preferred stock) equivalent in value thereto, per Right (subject to
adjustment).
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 Preferred Shares will be issued (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depository receipts) and in lieu
thereof, an adjustment in cash will be made based on the current market price of
the Preferred Shares or the Common Shares.
Company Ability to Redeem Rights and Amend Rights Agreement. At any time
prior to the time an Acquiring Person becomes such, the Board of Directors of
the Company may redeem the Rights in whole, but not in part, at a price of $.001
per Right (the "Redemption Price") payable, at the option of the Company, in
cash, Common Shares or such other form of consideration as the Board of
Directors of the Company shall determine. The redemption of the Rights may be
made effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. 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.
C-4
The Company may amend the Rights Agreement in any manner; provided, after
(a) such time as a person or group becomes an Acquiring Person, or (b) the
Distribution Date, whichever is earlier, the Company may not amend the Rights
Agreement in any manner that does adversely affect the interests of the holders
of the Rights.
General. 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
_______________. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
C-5
