EXHIBIT 4.1
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement"), is dated as of October 28, 2005
between CompuMed, Inc., a Delaware corporation (the "COMPANY"), and U.S. Stock
Transfer Corporation (the "RIGHTS AGENT"). Capitalized terms included in this
Agreement shall have the meaning set forth herein.
W I T N E S S E T H:
WHEREAS, on October 28, 2005, the Board of Directors of the Company (i)
authorized the issuance and declared a dividend of one right (a "Right") for
each share of the Common Stock, par value $0.01 per share ("Common Stock"), of
the Company outstanding as of the close of business on August 1, 2005 (the
"RECORD DATE"), each Right representing the right to purchase, on the terms and
conditions contained herein, one share (subject to adjustment) of Common Stock,
of the Company, and (ii) further authorized the issuance of one Right (subject
to adjustment) with respect to each share of Common Stock that shall become
outstanding (whether originally issued or delivered from the Company's treasury)
between the Record Date and the Distribution Date (as defined below); PROVIDED,
HOWEVER, that Rights may be issued with respect to shares of Common Stock that
shall become outstanding after the Distribution Date and prior to the Expiration
Date in accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include an Exempt Person; PROVIDED, HOWEVER, that
(i) if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person" became such
inadvertently (including, without limitation, because:
(A) such Person was unaware that it beneficially owned a
percentage of Common Stock 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 Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person as promptly
as practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
be an "Acquiring Person," then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement;
(ii) if, as of the date hereof, any Person is the Beneficial Owner of 15%
or more of the shares of Common Stock outstanding, such Person shall not be or
become an "Acquiring Person" unless and until such time as such Person shall
become the Beneficial Owner of additional shares of Common Stock (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Stock in shares of Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), unless, upon becoming the
Beneficial Owner of such additional shares of Common Stock, such Person is not
then the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; and
(iii) no Person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing the
number of shares outstanding increases the proportionate number of shares of
Common Stock beneficially owned by such Person to 15% or more of the shares of
Common Stock then outstanding, PROVIDED, HOWEVER, that if a Person shall become
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional shares of Common Stock
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Stock in shares of Common Stock or pursuant to a split
or subdivision of the outstanding Common Stock), then such Person shall be
deemed to be an "Acquiring Person" unless upon becoming the Beneficial Owner of
such additional shares of Common Stock such Person does not beneficially own 15%
or more of the shares of Common Stock then outstanding. For all purposes of this
Agreement, any calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock 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 hereof.
(b) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) "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.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN," any shares of Common Stock:
(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement);
(ii) that such Person or any of such Person's Affiliates
or Associates has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, whether or not in writing, or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own,"
(x) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange,
(y) securities that such Person has a right to acquire on the
exercise of Rights at any time prior to the occurrence of a Section 11(a)(ii)
Event, or
(z) securities issuable upon exercise of Rights from and after
the occurrence of a Section 11(a)(ii) Event if such Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 22 hereof ("ORIGINAL RIGHTS") or
pursuant to Section 11(i) or Section 11(o) hereof with respect to an adjustment
to Original Rights; or
(B) the right to vote pursuant to any agreement, arrangement
or understanding (whether or not in writing); PROVIDED, HOWEVER, that a Person
shall not be deemed the "Beneficial Owner" of, or to beneficially own," any
security if the agreement, arrangement or understanding to vote such
security arises solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable General Rules and Regulations under the Exchange Act; or
(iii) that are beneficially owned, directly or indirectly (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement), by any other Person
with which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding, whether or not in writing, for the
purpose of acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any securities of the
Company.
Notwithstanding anything in this paragraph (d) to the contrary,
(A) a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any securities acquired in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition, and
(B) 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.
(e) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company
or any duly authorized committee thereof.
(f) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Los
Angeles, California time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 p.m., Los Angeles, California time, on the
next succeeding Business Day.
(h) "COMMON STOCK" when used with reference to the Company shall mean the
Common Stock (currently par value $.01 per share) of the Company. "COMMON STOCK"
when used with reference to any Person other than the Company which shall be
organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person. "COMMON STOCK"
when used with reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest that shall
represent the right to participate in profits, losses, deductions and credits of
such Person and that shall be entitled to exercise the greatest voting power per
unit of such Person.
(i) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in Section
11(a)(iii) hereof.
(j) "CURRENT MARKET PRICE" shall have the meaning set forth in Section
11(d) hereof.
(k) "CURRENT VALUE" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(l) "DISTRIBUTION DATE" shall have the meaning set forth in Section 3(a)
hereof.
(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(n) "EXCHANGE RATIO" shall have the meaning set forth in Section 24(a)
hereof.
(o) "EXEMPT PERSON" shall mean the Company, any Subsidiary of the Company,
any employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any person or entity organized, appointed or
established for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.
(p) "EXPIRATION DATE" shall have the meaning set forth in Section 7(a)
hereof.
(q) "FINAL EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(r) "INVALIDATION TIME" shall have the meaning set forth in Section
11(a)(ii) hereof.
(s) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotations System.
(t) "ORIGINAL RIGHTS" shall have the meaning set forth in Section 1(d)(ii)
hereof.
(u) "PERSON" shall mean any individual, firm, corporation, partnership or
other entity.
(v) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b)
hereof.
(w) "PURCHASE PRICE" shall have the meaning set forth in Section 4 hereof.
(x) "RECORD DATE," with respect to the initial issuance of the Rights
shall be August 1, 2005.
(y) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a)(ii) hereof.
(z) "RIGHT CERTIFICATE" shall have the meaning set forth in Section 3(a)
hereof.
(aa) "SECTION 11(A)(II) EVENT" shall mean any instance in which any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person.
(ab) "SECTION 11(A)(II) TRIGGER DATE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ac) "SECTION 13 EVENT" shall mean any event described in clause (i), (ii)
or (iii) of Section 13(a) hereof.
(ad) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(ae) "SPREAD" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(af) "STOCK 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 the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such or such earlier date
as a majority of the Board of Directors shall become aware of the existence of
an Acquiring Person.
(ag) "SUBSTITUTION PERIOD" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ah) "SUBSIDIARY" of a Person shall mean any corporation or other entity
which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person and any corporation or other entity that is otherwise controlled by
such Person.
(ai) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section 3(b)
hereof.
(aj) "TRADING DAY" shall have the meaning set forth in Section 11(d)(i)
hereof.
(ak) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or Section
13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company 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 Agent as it may deem necessary or desirable. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-Rights Agent. In the event the Company appoints one or
more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agent will be as the Company may determine.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the Close of Business on the day (the "DISTRIBUTION DATE") which
is the EARLIER OF
(i) the tenth day after the Stock Acquisition Date or
(ii) the tenth Business Day (or such later day as may be determined
by action of the Board of Directors taken prior to the Close of Business on such
tenth Business Day and prior to such time as any Person becomes an Acquiring
Person) following the commencement by any Person (other than an Exempt Person)
of, or the first public announcement of the intent of any Person (other than an
Exempt Person) to commence, a tender or exchange offer upon the successful
consummation of which such Person would be the Beneficial Owner of 15% or more
of the outstanding Common Stock(irrespective of whether any shares are actually
purchased pursuant to any such offer),
(x) the Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock and not separate Right Certificates,
and
(y) each Right will be transferable only in connection with
the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock; PROVIDED, HOWEVER, that if the Distribution Date would be prior to
the Record Date, the Record Date shall be the Distribution Date; and PROVIDED
FURTHER, that if a tender offer or exchange offer referred to in clause (ii)
above is canceled or withdrawn prior to the Distribution Date, such offer shall
be deemed, for purposes of this Agreement, never to have been made.
As soon as practicable after the Distribution Date, the Rights Agent will
mail, by first-class, postage-prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such records, a
Right Certificate in substantially the form of EXHIBIT A hereto ("RIGHT
CERTIFICATE"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(i) or Section 11(o) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Common Stock, substantially
in the form attached hereto as EXHIBIT B ("SUMMARY OF Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date at the address of such holder shown on the records
of the Company.
(c) With respect to certificates for Common Stock outstanding as of the
Record Date, until the Distribution Date (or, if earlier, the Expiration Date),
the Rights will be evidenced by such certificates for Common Stock registered in
the names of the holders thereof together with a copy of the Summary of Rights.
Until the Distribution Date (or, if earlier, the Expiration Date), the surrender
for transfer of any certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall (subject to the
provisions of Section 11(a)(ii) and the other provisions hereof) also constitute
the surrender for transfer of the Rights associated with the Common Stock
represented thereby.
(d) Subject to the provisions of Section 11(a)(ii) and the other
provisions hereof, Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date and, in certain circumstances
provided for in Section 22 hereof, may be issued in respect of shares of Common
Stock that become outstanding after the Distribution Date. Certificates issued
for Common Stock (including without limitation certificates issued upon original
issuance, disposition from the Company's treasury or transfer or exchange of
Common Stock) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date (or, in certain circumstances as provided in Section
22 hereof, after the Distribution Date) shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in a Rights Agreement between CompuMed, Inc. and U.S. Stock
Transfer Corporation, as Rights Agent, dated as of October 28, 2005 and as
amended from time to time (the "AGREEMENT"), the terms of which are incorporated
herein by reference and a copy of which is on file at the principal executive
office of CompuMed, Inc. Under certain circumstances, as set forth in the
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. CompuMed, Inc. will mail to the holder
of this certificate a copy of the Agreement without charge promptly after
receipt by it of a written request therefore. Rights issued to or beneficially
owned by a Person who is or becomes an Acquiring Person or an Affiliate or
Associate of such Acquiring Person (as such terms are defined in the Agreement)
or, under certain circumstances, transferees thereof, will become void as
provided in Section 11(a)(ii) of the Agreement and thereafter may not be
transferred to any Person.
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates shall,
until the Distribution Date, be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall (subject to the provisions
of Section 11(a)(ii) and the other provisions hereof) also institute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates (including the forms of assignment and election to
purchase to be printed on the reverse thereof), when, as and if issued, shall be
substantially in the form set forth in EXHIBIT A hereto 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
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or automated quotation system on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Right Certificates, whenever
issued, evidencing the Rights issued on the Record Date shall be dated as of the
Record Date, and Right Certificates evidencing Rights issued after the Record
Date shall be dated as of the date of such issuance, and on their face Right
Certificates shall entitle the holders thereof to purchase one share of Common
Stock, or other securities or property as provided herein, as the same may from
time to time be adjusted as provided herein, at the price per share set forth
therein, as the same may from time to time be adjusted as provided herein (the
"PURCHASE PRICE").
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President, Chief Executive Officer or any Vice
President, either manually or by facsimile signature, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The 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,
issued and delivered 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 Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, 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 Right Certificate, the date of each Right
Certificate, and the certificate number for each Right Certificate.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 11(a)(ii) and the other
provisions hereof, at any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Right Certificates may be transferred or split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer any Right Certificate shall
surrender the Right Certificate at the principal office of the Rights Agent with
the form of assignment on the reverse side thereof duly endorsed (or enclose
with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be split up, combined or exchanged at the principal office
of the Rights Agent. Thereupon the Rights Agent, subject to the provisions of
Section 11(a)(ii) and the other provisions hereof, shall countersign (by manual
signature) 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) Subject to the provisions of Section 11(a)(ii) and the other
provisions hereof, 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, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become
exercisable at the Close of Business on the Distribution Date, and thereafter
may be exercised in whole or in part to purchase shares of Common Stock upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed (with such signature duly guaranteed), to the
Rights Agent at its principal office, together with payment of the aggregate
Purchase Price (subject to adjustment as hereinafter provided) with respect to
the number of shares of Common Stock (except as otherwise provided herein) as to
which such surrendered Rights are then being exercised, at or prior to the Close
of Business on the date (the "EXPIRATION DATE") which is the earliest of (i)
October 28, 2009 (the "FINAL EXPIRATION DATE"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof, or (iii) the time at which
the Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall initially be $0.40 for each share of Common
Stock issued pursuant to the exercise of a Right. The Purchase Price and the
number of shares of Common Stock or other securities to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Purchase Price shall be payable in lawful
money of the United States of America, in accordance with Section 7(c) hereof.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the number of shares of Common Stock to be purchased and an amount equal to
any applicable transfer tax, by cash, certified or official bank check or money
order payable to the order of the Company or the Rights Agent, the Rights Agent
shall, subject to Section 20(j) and Section 20(k) hereof, thereupon promptly
(i) requisition from any transfer agent of the Common Stock
certificates for the number of shares of Common Stock so elected to be purchased
(and/or requisition from the depository agent depository receipts representing
interests in such number of fractional shares of Common Stock as are to be
purchased, in which case certificates for the fractional shares of Common Stock
so represented shall be deposited with the depository agent) and the Company
will comply and hereby authorizes and directs such transfer agent (and any such
depository agent) to comply with all such requests,
(ii) requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14(b) hereof,
and
(iii) promptly after receipt of such Common Stock certificates,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, or, when appropriate, after receipt promptly deliver such
depository receipts and cash to or upon the order of the registered holder of
such Right Certificate; PROVIDED, HOWEVER, that in the case of a purchase of
securities, other than Common Stock, pursuant to Section 11 or Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii).
In the event that the Company is obligated to issue other securities of
the Company, pay cash and/or distribute other property pursuant to Section 11(a)
thereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, 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 Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and
(ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION 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 canceled
form or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that at all times it will cause to be
reserved and kept available, out of and to the extent of its authorized and
unissued shares of Common Stock not reserved for another purpose held in its
treasury, the number of shares of Common Stock that, as provided in this
Agreement, including Section 11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights, provided that the Company shall not
be required to reserve and keep available shares of Common Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii), Section 11(a)(iii)
or Section 13 hereof unless the Rights become exercisable pursuant to such
adjustments, and then only to the extent the Rights become exercisable pursuant
to such adjustments.
(b) So long as the shares of Common Stock issuable and deliverable upon
the exercise of Rights may be listed on any national securities exchange or
automated quotation system, as the case may be, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange or automated
quotation system, as the case may be, upon official notice of issuance upon such
exercise.
(c) From and after such time as the Rights become exercisable, the Company
shall use its best efforts to, if then necessary to permit the issuance of
shares of Common Stock upon the exercise of Rights, register the offering and
issuance of and qualify such shares of Common Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and other securities)
under the Securities Act and any applicable state securities or "blue sky" laws
(to the extent exemptions therefrom are not available), cause the related
registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective 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 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. 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. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all shares of Common Stock delivered upon
exercise of Rights shall, to the extent applicable, at the time of delivery of
the certificates for such securities (subject to payment of the aggregate
Purchase Price in respect thereof), be duly and validly authorized and issued
and fully paid and nonassessable securities in accordance with applicable law.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Common Stock (or other securities, as the case may be) upon the
exercise of Rights; PROVIDED, HOWEVER, that the Company shall not be required to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Right Certificates to a Person other than, or the issuance or delivery of
certificates for Common Stock (or other securities, as the case may be) upon
exercise of rights in a name other than that of, the registered holder of the
Right Certificate, and the Company shall not be required to issue or deliver a
Right Certificate or certificate for Common Stock (or other securities, as the
case may be) to a Person other than such registered holder 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. COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for shares of Common Stock (or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Stock (or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the aggregate
Purchase Price therefore (and any applicable transfer taxes) was made, PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which the
Common Stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Common Stock
transfer books of the Company are open. 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 Common Stock for which the Rights shall be
exercisable, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company except as provided herein.
SECTION 11. ADJUSTMENTS TO NUMBER AND KIND OF SHARES, NUMBER OF RIGHTS OR
PURCHASE PRICE.
The number and kind of shares subject to purchase upon the exercise of
each Right, the number of Rights outstanding and the Purchase Price are subject
to adjustment from time to time as provided in this Section 11.
(a) CHANGES IN COMPANY CAPITALIZATION; SUBSTITUTIONS.
(i) In the event that the Company shall at any time after the Record
Date
(A) declare or pay any dividend on Common Stock payable in
shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock
into a greater number of shares,
(C) combine or consolidate the outstanding shares of Common
Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock or
(D) issue any shares of its capital stock in a
reclassification of the Common Stock (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 immediately prior to 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 Common Stock or capital
stock, as the case may be, 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, upon payment of an amount equal to (x) the
Purchase Price in effect immediately prior to the record date or effective date
of such dividend, subdivision, combination or reclassification, multiplied by
(y) the number of shares of Common Stock, or shares of capital stock, as the
case may be, as to which a Right was exercisable immediately prior to such date,
the aggregate number and kind of shares of Common Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date, the holder thereof would have owned upon such exercise and been entitled
to receive, or would be deemed to have owned, by virtue of such dividend,
subdivision, combination or reclassification.
(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 hereinafter as the "SECTION 11(A)(II) EVENT"), then
(A) the Purchase Price shall be adjusted to be the Purchase
Price in effect immediately prior to the Section 11(a)(ii) Event multiplied by
the number of shares of Common Stock for which a Right was exercisable
immediately prior to such Section 11(a)(ii) Event, whether or not such Right was
then exercisable, and
(B) each holder of a Right, except as otherwise provided in
this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall thereafter have the
right to receive upon exercise thereof at a price equal to the Purchase Price
(as so adjusted), in accordance with the terms of this Agreement, such number of
shares of Common Stock (the "Adjustment Shares") as shall equal the result
obtained by dividing the Purchase Price (as so adjusted) by 50% of the current
per share market price of the Common Stock (determined pursuant to Section 11(d)
hereof) on the date of such Section 11(a)(ii) Event;
PROVIDED, HOWEVER, that the Purchase Price (as so adjusted) and the number of
Adjustment Shares so receivable upon exercise of a Right shall, following the
Section 11(a)(ii) Event, be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything in this Agreement
to the contrary, however, from and after the Section 11(a)(ii) Event
("INVALIDATION TIME"), any Rights that are beneficially owned by (x) any
Acquiring Person (or Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or such Affiliate or Associate) who becomes
a transferee after the Section 11(a)(ii) Event or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the Section 11(a)(ii) Event pursuant to either (I)
a transfer from the Acquiring Person to holders of its equity securities or to
any Person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer that the Board
of Directors has determined is part of a plan, arrangement or understanding that
has the purpose or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void without any further action
and any holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The Company shall
use all reasonable efforts to ensure that the provisions of this Section
11(a)(ii) are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. From and after the Section 11(a)(ii) Event, no Right
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 canceled. From and after the occurrence of an event
specified in Section 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) The Company may at its option substitute for a share of Common
Stock issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) a number of shares of other capital stock or fraction thereof
such that the current per share market price of one share of other capital stock
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock. In the event that the number of shares of
Common Stock that are authorized by the Company's Articles of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof and the Rights shall become so
exercisable, the Board of Director 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
Adjustment Shares issuable upon the exercise of
a Right (computed using the Current Market Price
used to determine the number of Adjustment
Shares) (the "CURRENT VALUE"), over (2) the then
current Purchase Price times the number of
shares of Common Stock for which a Right was
exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (such
excess, the "SPREAD") and
(B) with respect to each Right (other than
Rights which have become void pursuant to
Section 11(a)(ii) hereof), make adequate
provision to substitute for any or all such
Adjustment Shares (1) cash, (2) shares of other
equity securities of the Company (including,
without limitation, shares, or units of shares,
of preferred stock which, by virtue of having
dividend, voting or liquidation rights
substantially comparable to those of the Common
Stock, are deemed in good faith by the Board of
Directors to have substantially the same value
as shares of Common Stock (such shares of or
units of shares of preferred stock are herein
called "COMMON STOCK EQUIVALENTS")), (3) debt
securities of the Company, (4) other assets,
(5) a reduction of the Purchase Price, or (6) any
combination of the foregoing, having a value
which, when added to the value of the shares of
Common Stock actually issued upon exercise of
such Right, shall have an aggregate value equal
to the Current Value, where such aggregate value
has been determined in good faith by the Board
of Directors based upon the advice of a
nationally recognized independent investment
banking firm selected in good faith by the
Board of Directors;
PROVIDED, HOWEVER, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the date
(the "SECTION 11(A)(II) TRIGGER DATE") of the first occurrence of a Section
11(a)(ii) 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, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and cash have an aggregate
value equal to the Spread. If, upon the occurrence of a Section 11(a)(ii) Event,
the number of shares of Common Stock authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to permit exercise in full of
the Rights in accordance with Section 11(a)(ii) hereof, and if the Board of
Directors 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 Section 11(a)(ii) Trigger Date, 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, is herein called the "SUBSTITUTION
PERIOD"). To the extent that the Company determines that some action must be
taken pursuant to the first or second sentence 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 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 first 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 Stock shall be the Current Market Price per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to be equal to the Current
Market Price per share of the Common Stock on such date. The Board of Directors
may, but shall not be required to, establish procedures to allocate the right to
receive Common Stock upon the 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 Common Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) shares of Common Stock, shares having the same rights,
privileges and preferences as Common Stock ("EQUIVALENT COMMON Stock") or
securities convertible into Common Stock or Equivalent Common Stock at a price
per share of Common Stock or Equivalent Common Stock (or having a conversion
price per share, if a security convertible into Common Stock or Equivalent
Common Stock) less than the Current Market Price per share of Common Stock 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 shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock and Equivalent Common Stock (and the aggregate
initial conversion price of the convertible securities so to be offered,
including the price required to be paid to purchase such convertible security)
would purchase at such Current Market Price, and the denominator of which shall
be the number of shares of Common Stock outstanding on such record date, plus
the number of additional shares of Common Stock or Equivalent Common Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such noncash consideration shall be as determined in
good faith by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent. Shares of Common Stock 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,
warrants or convertible securities are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) 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 Current Market Price per share of Common Stock
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 cash, assets,
subscription rights or warrants applicable to a share of Common Stock and the
denominator of which shall be such Current Market Price per share of Common
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) CURRENT MARKET PRICE. (i) For the purpose of any computation hereunder
(including computations pursuant to Section 14 hereof), other than computations
made pursuant to Section 11(a)(iii) hereof, the "CURRENT MARKET PRICE" per share
of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such stock for the 30 consecutive Trading Days
immediately prior to such date, and for purpose of computations made pursuant to
Section 11(a)(iii) hereof, the "CURRENT MARKET PRICE" per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices per
share of such stock for the 10 consecutive Trading Days immediately following
such date; PROVIDED, however, that in the event the Current Market Price per
share of Common Stock is determined during a period following the announcement
by the issuer of such stock of (i) any dividend or distribution on such stock
(other than a regular quarterly cash dividend) or (ii) any subdivision,
combination or reclassification of the stock, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the effective date of
such subdivision, combination or reclassification, occurs, then, and in each
such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq or such
other system as may then be in use, or, if on any such date the prices of shares
of Common Stock are not reported by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such stock selected by the Board of Directors. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of Directors shall
be used. The term "TRADING DAY" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
a Business Day. If the Common Stock is not publicly held or not so listed or
traded, "CURRENT MARKET PRICE" per share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; PROVIDED, HOWEVER,
that any adjustments 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-thousandth of a share, 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 after the date of the transaction that mandates such adjustment or (ii)
one month prior to the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
applicable provisions with respect to the shares of Common Stock contained in
Sections 7, 9, 10, 11, 13 and 14 hereof, and such provisions 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 shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustments as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c) hereof, 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 shares of
Common Stock obtained by (i) multiplying (x) the number of shares covered by a
Right immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment in the number of Rights shall become that number
of Rights (calculated to whole number and eliminating any fractions thereof)
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 shall, 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 may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of 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 shares of Common Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of shares that 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 fraction of Common Stock
or 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
nonassessable shares of Common Stock 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 the
issuance to the holder of any Right exercised after such record date the shares
of Common Stock and cash, other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the shares of Common Stock and
cash, 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 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 of Common Stock and cash, other capital stock or securities,
if any, 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 in their good faith judgment the Board of Directors shall determine
to be advisable in order that any
(i) consolidation or subdivision of the Common Stock,
(ii) issuance for cash of any shares of Common Stock,
(iii) issuance for cash of securities that by their terms are
convertible into or exchangeable for shares of Common Stock,
(iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company, shall not be taxable to holders of
its Common Stock.
(n) The Company covenants and agrees that, after the earlier of the
Distribution Date or the Stock 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 the 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.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Record Date and prior to the
Distribution Date:
(i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares, or
(iv) issue any shares of its capital stock in a reclassification of
the outstanding Common Stock, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTMENTS.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for
the Common Stock a copy of such certificate and
(c) mail a brief summary thereof to each record holder of a Right (or, if
prior to the Distribution Date, to each holder of Common Stock) in accordance
with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give
such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. The Rights Agent shall be fully protected in
relying upon any certificate prepared by the Company pursuant to this Section 12
hereof and on any adjustment therein described and shall not be obligated or
responsible for calculating any adjustment nor shall it be deemed to have
knowledge of any such adjustment unless and until it shall have received such a
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
Section 11(a)(ii) Event
(i) the Company shall consolidate with or shall 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 Stock 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 earnings 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 wholly owned Subsidiaries of
the Company), then upon the first occurrence of such event, proper provision
shall be made so that:
(A) each holder of a Right (other than Rights which have
become void pursuant to Section 11(a)(ii) hereof) shall thereafter
have the right to receive, upon the exercise thereof at the Purchase
Price (as theretofore adjusted in accordance with Section 11 hereof), in
accordance with the terms of this Agreement and in lieu of shares of Common
Stock of the Company, such number of validly authorized and issued, fully paid,
nonassessable and freely tradable shares of Common Stock 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 Purchase Price (as theretofore adjusted in accordance
with Section 11 hereof) by 50% of the current per share market price of the
Common Stock 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 Purchase Price (as theretofore adjusted in
accordance with Section 11 hereof) and the number of shares of Common Stock 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 Stock of such 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 Rights 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 shares of Common
Stock 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
the shares of its Common Stock 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, warrants and other property
which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Stock of the Principal Party
receivable upon the 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 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 clause (i) or (ii)
of the first sentence of Section 13(a) hereof:
(A) the Person that is the issuer of the securities into which
shares of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Stock of which has 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 the merger, or, if there is more than one such
Person, the Person the Common Stock of which has 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 clause (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 as is
the issuer of Common Stock 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),
(A) if the Common Stock 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, and if such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "PRINCIPAL PARTY" shall refer to such
other Person, or
(B) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of all of which are and have been so
registered, the term "PRINCIPAL PARTY" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market value of
shares outstanding, or
(C) 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 (A) and (B) 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 Section 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 offering and sale of 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 Stock of the Principal
Party shall be listed on a national securities exchange, to list (or continue
the listing of) the Rights and the securities purchasable upon exercise of the
Rights on such securities exchange and, if the Common Stock of the Principal
Party shall not be listed on a national securities exchange, to cause the Rights
and the securities purchasable upon exercise of the Rights to be reported by
Nasdaq or such other system as may then be in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the principal Party subject
to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a)
hereof shall occur, the Rights which have not theretofore been exercised
pursuant to either Section 7 or Section 11(a)(ii) hereof shall thereafter be
exercisable only in the manner described in Section 13(a) hereof.
(d) Furthermore, in case the Principal Party that is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate or Articles of Incorporation or
Bylaws or other instrument governing its corporate 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, shares of
Common Stock of such Principal Party at less than the then Current Market Price
per share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then Current Market Price, or
(ii) providing for any special payment, tax or similar provisions in
connection with the issuance of the Common Stock 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 occurrence of a Section 11(a)(ii) Event, enter into any transaction of the
type contemplated by clauses (i) through (iii) of Section 13(a) hereof if:
(x) at the time of or immediately after such
consolidation, merger, sale or other
transaction there are any rights, warrants
or other instruments or securities
outstanding or agreements in effect that
would substantially diminish or otherwise
eliminate the benefits intended to be
afforded by the Rights; or
(y) prior to, simultaneously with or
immediately after such consolidation, merger,
sale or other transaction, the shareholders
of the Person who constitutes, or would
constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have
received a distribution of Rights previously
owned by such Person or any of its Affiliates
or Associates; or
(z) 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. If the Company
shall not issue fractions of Rights, in lieu of such fractional Rights, there
shall be paid to the holders of record 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 then current market value of a whole Right. For the
purposes of this Section 14(a), the then current market value of a Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which fractional Rights would have been issuable, determined in the same
manner as the closing price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates that evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the closing price
of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of a Right expressly waives
his right to receive any fractional Right or any fractional share of Common
Stock or other securities of the Company upon exercise of a Right, except as
provided by this Section 14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement are vested in the
respective holders of record of the Right Certificates (and, prior to the
Distribution Date, the holders of record of the Common Stock); and any holder of
record of any Right Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf for his own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company or any other
Person 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, accordingly, that they 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 not be evidenced by a
Right Certificate and will be transferable only in connection with the transfer
of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the designated office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent or the transfer agent
of the Common Stock) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligations; provided that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder of a Right, as such, shall be entitled to vote, receive
dividends in respect of or be deemed for any purpose to be the holder of Common
Stock or any other securities of the Company that may at any time be issuable
upon the exercise of the Rights, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders, or to receive dividends or subscription rights in respect of any
such stock or securities, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent, its directors, officers, employees and agents for,
and to hold each of them harmless against, any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent for anything done or omitted to be done by the Rights Agent
or such other indemnified party in connection with the acceptance and
administration of this Agreement or the performance of the Rights Agent's duties
hereunder, including the cost and expenses of defending against any claim of
liability in the premises.
(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 or the performance of the Rights Agent's
duties hereunder, in reliance upon any Right Certificate, certificate for Common
Stock or 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, guaranteed, verified or
acknowledged, by the proper Person or Persons.
(c) The indemnity provided in this Section 18 shall survive the expiration
of the Rights, the resignation or removal of the Rights Agent and the
termination of this Agreement.
SECTION 19. MERGER, 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
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided 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 Rights
Certificates so countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, any successor 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 such 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 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 advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted to be taken by it in good faith and in accordance with
such advice or 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
(including without limitation the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering to be taken 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 the Chairman of the Board, the President, the Chief
Executive Officer, any Vice President 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 to be taken in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
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 (i) be responsible for (A) the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or the validity or execution of any Right
Certificate (except its countersignature thereof), (B) any breach by the Company
of any covenant or condition contained in this Agreement or in any Right
Certificate, (C) any adjustment required under the provisions of Section 11 or
13 hereof or (D) the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment) or (ii) by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Common Stock
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(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 the
Chairman of the Board, the President, the Chief Executive Officer, any Vice
President, or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer, or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the 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 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 that the Rights Agent was not grossly negligent
in the selection thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
election to purchase or the form of assignment set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
(l) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
(m) Anything in this Agreement to the contrary withstanding, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits).
SECTION 21. CHANGE OF RIGHTS AGENT.
(a) 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 Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) 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 Stock by registered or certified mail, and 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. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after 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 incumbent Rights Agent or the holder of record 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
(i) a corporation organized and doing business under the laws of the
United States or any State thereof, in good standing, 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 $10,000,000 or
(ii) an Affiliate controlled by a corporation described in clause
(i) of this sentence.
(b) 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 Stock,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. The failure to give any notice required by this Section 21 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 to the contrary,
the Company may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by the Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to a Triggering Event or the
redemption or expiration of the Rights, the Company may, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of employee stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, or in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided that
(i) no such Right Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and
(ii) no such Right Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
SECTION 23. REDEMPTION.
(a) The Board of Directors may, at its option, at any time prior to the
earlier of
(i) the first occurrence of a Section 11(a)(ii) Event, and
(ii) the Close of Business on the Expiration Date,
cause the Company to redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "REDEMPTION PRICE").
(b) Immediately upon the effective time of the redemption of the Rights as
specified by the action of the Board of Directors ordering the redemption of the
Rights, 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, without any interest
thereon. Promptly after the effective time of the redemption of the Rights as
specified by the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent of the
Common Stock. Any notice which is mailed in the manner provided herein shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the effective time of the redemption, the method by which
the payment of the Redemption Price will be made and the time for such payment.
The failure to give any notice required by this Section 23(b) or any defect
therein shall not affect the legality or validity of the action taken by the
Company.
SECTION 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after the first
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right
(such exchange ratio 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 Stock then outstanding.
(b) Immediately upon the effective time of the exchange of the Rights as
specified by the action of the Board of Directors ordering the exchange of any
Rights pursuant to Section 24(a) hereof 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 shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give notice of any
such exchange; provided that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall mail
a notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
that 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 shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
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 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated by this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) In any exchange pursuant to Section 24(a) hereof, the Company shall
not be required to issue fractions of shares of Common Stock or to distribute
certificates that evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock. For the
purposes of this Section 24(d), the current market value of a whole share of
Common Stock shall be the Current Market Price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to Section 24(a)
hereof.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the earlier of the Distribution Date or
the Stock Acquisition Date, shall propose to
(i) effect any of the transactions referred to in Section 11(a)(i)
hereof or to pay any dividend to the holders of record of Common Stock payable
in stock of any class or to make any other distribution to the holders of record
of Common Stock (other than a regular quarterly cash dividend), or
(ii) offer to the holders of record of Common Stock options,
warrants, or other rights to subscribe for or to purchase shares of Common Stock
(including any security convertible into or exchangeable for Common Stock) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, or
(iii) effect any reclassification of the Common Stock or any
recapitalization or reorganization of the Company, or
(iv) to effect the liquidation, dissolution or winding up of the
Company,
then, in each such case, the Company shall give to each holder of record of a
Right Certificate, in accordance with Section 26 hereof, notice of such proposed
action, which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i), or such dividend or distribution, or the date
on which such reclassification, recapitalization, reorganization, liquidation,
dissolution or winding up is to take place and the record date for determining
participation therein by the holders of record of Common Stock, 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 record of common Stock 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 record of Common Stock, whichever shall be the earlier. The failure
to give any notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
(b) If a Section 11(a)(ii) Event shall occur, then the Company shall, as
soon as practicable thereafter, give to each holder of Rights, 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 the holders of
Rights under Section 11(a)(ii) hereof.
(c) In case any of the transactions referred to in Section 13 hereof are
proposed, then, in any such case, the Company shall give to each holder of
Rights, in accordance with Section 26 hereof, notice of the proposal of such
transaction at least 10 days prior to consummating such transaction, which
notice shall specify the proposed event and the consequences of the event to
holders of Rights.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of record of any Right Certificate or Right to or
on behalf of 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:
CompuMed, Inc.
0000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
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 record of any Right Certificate or Right 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:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right 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 it appears
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent of the Common Stock.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
For as long as the Rights are redeemable, and except as provided in the
last sentence of this Section 27, the Company may, in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of any
holders of the Rights or the Common Stock. At any time when the Rights are not
redeemable, and except as provided in the last sentence of this Section 27, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Right certificates
in order to:
(a) cure any ambiguity;
(b) correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions herein; or
(c) change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable;
provided that no such supplement or amendment shall adversely affect the
interests of the holders of Right Certificates as such; and provided that this
Agreement may not be so supplemented or amended to:
(i) lengthen a time period relating to when the Rights may be
redeemed or this Agreement amended at the sole and absolute discretion of the
Company at such time as the Rights are not redeemable; or
(ii) lengthen or shorten any other time period unless such
lengthening or shortening of such other time period is for the purpose of
protecting, enhancing or clarifying the rights of, or the benefits to, the
holders of Rights as such (other than any Acquiring Person or an Affiliate or
Associate of such an Acquiring Person).
Upon the delivery of a certificate from an officer of the Company that
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made that changes the Redemption Price or the
number of one one-thousandth of a share of Common Stock for which a Right is
exercisable; and no supplement or amendment that changes the rights or duties of
the Rights Agent under this Agreement shall be effective without the consent of
the Rights Agent.
SECTION 28. SUCCESSORS.
All of 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.
Nothing in this Agreement shall be construed to give any Person other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
SECTION 30. CHOICE OF LAW.
This Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts to be made and performed entirely within such
state.
SECTION 31. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, 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 32. 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.
SECTION 33. SEVERABILITY.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 34. 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,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights, as such, and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CompuMed, Inc.
By: /s/ Xxxx X. XxXxxxxxxx
---------------------------------
Name: Xxxx X. XxXxxxxxxx
---------------------------------
Title: President and CEO
---------------------------------
U.S. Stock Transfer Corporation
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
---------------------------------
Title: Assistant Vice President
---------------------------------
EXHIBIT A
----------
[Form of Right Certificate]
Certificate No. _______ ________ Rights
NOT EXERCISABLE AFTER OCTOBER 28, 2009 OR EARLIER IF REDEEMED OR EXCHANGED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF COMPUMED, INC., AT $0.001 PER
RIGHT (SUBJECT TO ADJUSTMENT) ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY A PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF SUCH ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR, UNDER CERTAIN CIRCUMSTANCES,
TRANSFEREES THEREOF, WILL BECOME VOID AS PROVIDED IN SECTION 11(a)(ii) OF THE
RIGHTS AGREEMENT AND THEREAFTER MAY NOT BE TRANSFERRED TO ANY PERSON.
Right Certificate
CompuMed, 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 Rights Agreement dated as of October 28, 2005, as the same may be amended
from time to time ("Rights Agreement"), between CompuMed, Inc., a Delaware
-----------------
corporation (the "Company"), and U.S. Stock Transfer Corporation (the "Rights
------- ------
Agent"), to purchase from the Company at any time after the Distribution Date
---
(as that term is defined in the Rights Agreement) and prior to 5:00 P.M. (San
Antonio time) on October 28, 2009 at the principal office of the Rights Agent,
or its successor as Rights Agent, fully paid and nonassessable shares of Common
Stock, par value $.01 per share ("Stock"), of the Company at a purchase price of
-----
$0.40, as the same may from time to time be adjusted in accordance with the
Rights Agreement (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 shares
of Common Stock 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
October 28, 2005.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock that may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Common Stock, or other property, may be acquired
upon exercise of the Rights evidenced by this Right Certificate, as provided by
the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, which terms,
provisions and conditions are incorporated herein by reference and made a part
hereof, and reference to the Rights Agreement is made for a full description of
the rights, limitations of rights, obligations, duties and immunities of the
Rights Agent, the Company and the holders of record of Right Certificates.
Copies of the Rights Agreement are on file at the principal executive office of
the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent designated for that
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder of record to purchase
the same aggregate number of shares of Common Stock as the Rights evidenced by
the Right Certificate or Right Certificates surrendered entitled that holder to
purchase. If this Right Certificate is 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 right Certificate may be (i) redeemed by the Company by action of the Board
of Directors at its option at a redemption price of $0.001 per Right, or (ii)
exchanged by action of the Board of Directors at its option in whole or in part
for shares of the Common Stock, par value $.01 per share, of the Company.
No fractional shares of Common Stock or other securities of the Company are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
and in lieu thereof, as provided in the Rights Agreement, a cash payment may be
made. As provided in the Rights Agreement, interests in fractions of shares of
Common Stock may, at the election of the Company, be evidenced by depository
receipts.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company that may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
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 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.
The Board of Directors shall have the exclusive power and authority to
administer the Rights Plan in accordance with the Rights Agreement and to
exercise the rights and powers specifically granted to the Board of Directors or
the Company, or as may be necessary or advisable in the administration of the
Rights Plan.
[Signature Page Follows]
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ________________________, 2005.
ATTEST: COMPUMED, INC.
_________________________ By:_______________________________________
Xxxxxx Xxxx, Controller Xxxx X. XxXxxxxxxx,
President and Chief Executive Officer
COUNTERSIGNED:
__________________________
as Rights Agent
By:_______________________
Name:_____________________
Title:____________________
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights evidenced by this
Right Certificate)
FOR VALUE RECEIVED _______________________________________ hereby sells,
assigns and transfers unto
______________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________ rights
evidenced by this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________ Attorney, to transfer such Rights on the books of the
within-named company, with full power of substitution.
Dated:
_________________________
Signature
MEDALLION SIGNATURE GUARANTEE:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_______________________
Signature
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise the Rights evidenced by this
Right Certificate.)
To: CompuMed, Inc.
The undersigned hereby irrevocably elects to exercise _______ Rights
evidenced by this Right Certificate to purchase the securities or other property
due upon the exercise of such Rights and requests that certificates for any such
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 Rights 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
MEDALLION SIGNATURE GUARANTEE:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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.
EXHIBIT B
----------
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT DATED AS OF
OCTOBER 28, 2005, BETWEEN COMPUMED, INC. AND U.S. STOCK TRANSFER CORPORATION AS
RIGHTS AGENT (THE "RIGHTS AGREEMENT"), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY
----------------
A PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
SUCH ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR,
UNDER CERTAIN CIRCUMSTANCES, TRANSFEREES THEREOF, WILL BECOME VOID AS PROVIDED
IN SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT AND THEREAFTER MAY NOT BE
TRANSFERRED TO ANY PERSON.
SUMMARY OF RIGHTS TO
PURCHASE COMMON STOCK
On October 28, 2005, the Board of Directors of CompuMed, Inc., a Delaware
corporation (the "Company"), declared a dividend of one Right for each
-------
outstanding share of Common Stock, par value $.01 per share, of the Company (the
"Common Stock"). The dividend is payable to holders of record of Common Stock
-------------
at the close of business on August 1, 2005 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company shares of Common
Stock at a Purchase Price of $0.40. The terms and conditions of the Rights are
contained in a Rights Agreement between the Company and U.S. Stock Transfer
Corporation.
As discussed below, initially the Rights will not be exercisable,
certificates for the Rights will not be issued and the Rights will automatically
trade with the Common Stock.
Until the close of business on the earlier of (i) the tenth day following
the public announcement that a person or group of affiliated or associated
persons ("Acquiring Person") other than the Company, any subsidiary of the
-----------------
Company or any employee benefit plan or employee stock plan of the Company or of
any subsidiary of the Company ("Exempt Person") has acquired, or obtained the
-------------
right to acquire, beneficial ownership of 15% or more of the outstanding Common
Stock (the "Stock Acquisition Date") or (ii) the tenth business day following
-----------------------
the commencement by any person (other than an Exempt Person) of, or the
announcement of the intention to commence, a tender or exchange offer that would
result in the ownership of 15% or more of the outstanding Common Stock (the
earlier of such dates in clauses (i) and (ii) being called the "Distribution
------------
Date"), the Rights will be evidenced, with respect to any of the Common Stock
----
certificates outstanding as of August 1, 2005, by such Common Stock certificate,
together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date (or the
earlier redemption or expiration of the Rights), the Rights will be represented
by and transferred with, and only with, the Common Stock. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of shares of Common Stock will contain a legend incorporating the
Rights Agreement by reference. Until the Distribution Date (or the earlier
redemption or expiration of the Rights), the surrender for transfer of any of
the Company's Common Stock certificates, with or without such legend or a copy
of this Summary of Rights, will also constitute the surrender for transfer of
the Rights associated with the Common Stock evidenced by such certificates. As
soon as practicable following the Distribution Date, separate Right Certificates
will be mailed to holders of record of Common Stock at the close of business on
the Distribution Date, and thereafter the Right Certificates alone will evidence
the Rights and the Rights will be transferable separate and apart from the
Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on October 28, 2009, unless redeemed or
exchanged earlier as described below.
The Purchase Price payable and the number of shares of Common Stock or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular cash dividends and dividends payable in Common Stock) or of subscription
rights or warrants.
If any Person (other than an Exempt Person) becomes the beneficial owner of
15% or more of the then outstanding shares of Common Stock, each holder of a
Right, other than the Acquiring Person and/or its affiliates, associates and
transferees, will have the right to receive, upon payment of the Purchase Price,
a number of shares of Common Stock having a market value equal to twice the
Purchase Price. In the event that insufficient shares of Common Stock are
available for the exercise in full of the Rights, the Company shall, in lieu of
issuing shares of Common Stock upon exercise of Rights, to the extent permitted
by applicable law and any material agreements then in effect to which the
Company is a party, issue cash, property or other securities of the Company
(which may be accompanied by a reduction in the Purchase Price), in proportions
determined by the Company, so that the aggregate value of such cash, property or
other securities received is equal to twice the Purchase Price. After the
acquisition of shares of Common Stock by an Acquiring Person as described in
this paragraph, Rights that are (or, under certain circumstances, Rights that
were) beneficially owned by an Acquiring Person and/or its affiliates,
associates and transferees will be void.
The Board of Directors may, at its option, at any time after a person
becomes an Acquiring Person, authorize the Company to exchange all or part of
the then outstanding and exercisable Rights for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, provided that the Board
of Directors may not effect such exchange after the time that any Person (other
than an Exempt Person) becomes the beneficial owner of 50% or more of the Common
Stock then outstanding. In the event that insufficient shares of Common Stock
are available for such exchange, the Board of Directors shall take all such
action as may be necessary to authorize such additional shares of Common Stock.
Unless the Rights are earlier redeemed, if, after the Stock Acquisition
Date, the Company is acquired in a merger or other business combination (in
which any shares of the Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) is sold or transferred in one or
more transactions, other than a transfer to a lender (or an assignee of a
lender) of the Company pursuant to material agreements then in effect to which
the Company is a party, the Rights Agreement provides that proper provision
shall be made so that each holder of record of a Right will from and after that
time have the right to receive, upon payment of the Purchase Price, that number
of shares of common stock of the acquiring company which has a current market
price at the time of such transaction equal to twice the Purchase Price.
Interests in fractions of shares of Common Stock may, at the election of
the Company, be evidenced by depository receipts. The Company may also issue
cash in lieu of fractional shares of Common Stock.
At any time until a person becomes an Acquiring Person, the Board of
Directors may cause the Company to redeem the Rights in whole, but not in part,
at a price of $0.001 per Right, subject to adjustment. Immediately upon the
effective time of the redemption authorized by the Board of Directors the right
to exercise the Rights will terminate, and the holders of the Rights will only
be entitled to receive the redemption price without any interest thereon.
As long as the Rights are redeemable, the Company may, except with respect
to the redemption price or the number of shares of Common Stock for which a
Right is exercisable, amend the Rights in any manner. At any time when the
Rights are not redeemable, the Company may amend the Rights in any manner that
does not adversely affect the interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Company, including without limitation the right to vote or to
receive dividends.
The Board of Directors shall have the exclusive power and authority to
administer the Rights Plan and to exercise the rights and powers specifically
granted to the Board of Directors or the Company, or as may be necessary or
advisable in the administration of the Rights Plan.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company by
written request sent to 0000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000, Xxx Xxxxxxx, XX
00000, Attn: Secretary. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, as amended from time to time, which is incorporated in this summary
description by reference. In the event of a conflict between this summary
description and the Rights Agreement, the Rights Agreement will prevail.
