Exhibit 4.1
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RIGHTS AGREEMENT
between
INVACARE CORPORATION
and
NATIONAL CITY BANK,
as Rights Agent
Dated July 8, 2005
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Table of Contents
Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................6
Section 3. Issuance of Rights..............................................6
Section 4. Form of Rights Certificates.....................................8
Section 5. Countersignature and Registration...............................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates...................................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..11
Section 8. Cancellation and Destruction of Rights Certificates............12
Section 9. Reservation and Availability of Capital Stock..................13
Section 10. Preferred Shares Record Date...................................14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights...............................................14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power..................................................22
Section 14. Fractional Rights and Fractional Shares........................24
Section 15. Rights of Action...............................................25
Section 16. Agreement of Rights Holders....................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............26
Section 18. Concerning the Rights Agent....................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent......27
Section 20. Duties of Rights Agent.........................................27
Section 21. Change of Rights Agent.........................................29
Section 22. Issuance of New Rights Certificates............................30
Section 23. Redemption.....................................................30
Section 24. Exchange.......................................................31
Section 25. Notice of Certain Events.......................................32
Section 26. Notices........................................................33
Section 27. Supplements and Amendments.....................................34
Section 28. Successors.....................................................35
Section 29. Actions by the Board, etc......................................35
Section 30. Benefits of this Agreement.....................................35
Section 31. Severability...................................................35
Section 32. Governing Law..................................................35
Section 33. Counterparts...................................................36
Section 34. Descriptive Headings...........................................36
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated July 8, 2005 (the "Agreement"), between INVACARE
CORPORATION, an Ohio corporation (the "Company"), and NATIONAL CITY BANK, a
national banking association, as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, effective July 8, 2005 the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right for each
Common Share (as hereinafter defined) and for each Class B Common Share (as
hereinafter defined) outstanding at the close of business on July 19, 2005 (the
"Record Date"), and authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(i) or Section
11(p) hereof) for each Common Share and Class B Common Share issued between the
Record Date (whether originally issued or delivered from the Company's treasury)
and the earlier to occur of the Distribution Date or the Expiration Date (as
such terms are hereinafter defined), each Right initially representing the right
to purchase one one-thousandth of a Series A Participating Serial Preferred
Share of the Company having the rights, powers and preferences set forth in the
form of Certificate of Amendment attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
Company Common Shares representing 30% or more of the total voting power of the
Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit or share ownership plan of
the Company or of any Subsidiary of the Company, or (iv) any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, (x) no Person shall become an "Acquiring
Person" solely as the result of an acquisition of Company Common Shares by the
Company (including, without limitation, any acquisition of fractional shares in
connection with any combination of the Company Common Shares into a smaller
number of shares) which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to shares
representing 30% or more of the total voting power of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of shares representing 30% or more of the total voting power of the
Company then outstanding solely as the result of an acquisition of Company
Common Shares by the Company and shall, following written notice from, or public
disclosure by, the Company of such share purchases by the Company become the
Beneficial Owner of any additional Company Common Shares and shall then
beneficially own shares representing 30% or more of the total voting power of
the Company then outstanding, then such Person shall be deemed to be an
"Acquiring Person" and (y) if the Board determines in good faith that a Person
who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable (as determined in good faith by
the Board of Directors), following receipt of written notice from the Company of
such event, of Beneficial Ownership of a sufficient number of Company Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement unless and until such Person shall again become an "Acquiring Person."
(b) "Act" shall mean the Securities Act of 1933, as amended.
(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, provided, however,
that a Person will not be deemed to be the Affiliate or Associate of another
Person solely because either or both Persons are or were Directors of the
Company.
(d) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
(e) "Agreement" shall mean this Rights Agreement as originally executed or
as it may from time to time be supplemented, amended, renewed, restated or
extended pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, owns or has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), whether
or not in writing, or upon the exercise of conversion rights, exchange
rights, other rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
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(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, or any comparable or
successor rule), including pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), whether or not in writing; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) 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
provisions of the General Rules and Regulations under the Exchange Act, and
(B) is not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities) whether or not in writing, for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy or
consent as described in the proviso to subparagraph (ii) of this paragraph
(f)) or disposing of any voting securities of the Company.
For all purposes of this Agreement, any calculation of the number of
Company Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of the total voting power
of the Company represented by such outstanding Company Common Shares of
which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(l)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date hereof.
(g) "Board" shall mean the Board of Directors of the Company, as it may be
comprised from time to time.
(h) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Ohio are authorized or
obligated by law or executive order to close.
(i) "Class B Common Shares" shall mean the Class B Common Shares, without
par value, of the Company or any other shares of capital stock of the Company
into which such shares shall be reclassified or changed after the date hereof.
(j) "Close of business" on any given date shall mean 5:00 p.m., Cleveland,
Ohio time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., Cleveland, Ohio time, on the next succeeding
Business Day.
(k) "Common Shares" when used with reference to the Company, shall mean the
Common Shares, without par value, of the Company or any other shares of capital
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stock of the Company into which such shares shall be reclassified or changed
after the date hereof. "Common Shares," when used with reference to any Person
organized in corporate form other than the Company, shall mean (i) the capital
stock or other equity interest in such Person with the greatest voting power,
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or (iii) if such Person is a Subsidiary (as
hereinafter defined) of another Person, the capital stock, equity securities of,
or other equity interest in, the Person or Persons which ultimately control such
first-mentioned Person and which has issued any such outstanding capital stock,
equity securities or equity interest. "Common Shares," when used with reference
to any Person not organized in corporate form, shall mean units of beneficial
interest which (x) represent the right to participate generally in the profits
and losses of such Person (including without limitation any flow-through tax
benefits resulting from an ownership interest in such Person) and (y) are
entitled to exercise the greatest voting power of such Person or, in the case of
a limited partnership, have the power to remove the general partner or partners.
(l) "Common share equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(m) "Company" shall have the meaning set forth in the first paragraph of
this Agreement until a successor corporation or entity shall have become such or
until a Principal Party (as hereinafter defined) shall assume, and thereafter be
liable for, all obligations and duties of the Company hereunder pursuant to the
applicable provisions of this Agreement, and thereafter, "Company" shall mean
such successor or Principal Party, respectively.
(n) "Company Common Shares" shall mean the Common Shares and the Class B
Common Shares.
(o) "Current market price" shall have the meaning set forth in Section
11(d)(i) hereof.
(p) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(q) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(r) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(s) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(t) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(u) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(v) "Final Expiration Date" shall mean the close of business on July 8,
2015.
(w) "Person" shall mean any individual, firm, corporation, partnership,
trust or other entity.
(x) "Preferred Shares" shall mean Series A Participating Serial Preferred
Shares, without par value, of the Company having the rights and preferences set
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forth in the form of Certificate of Amendment attached to this Agreement as
Exhibit A and, to the extent that there is not a sufficient number of shares of
Series A Participating Serial Preferred Shares authorized to permit the full
exercise of the Rights, any other series of Preferred Shares, without par value,
of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Participating Serial Preferred Shares.
(y) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(z) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(aa) "Record Date" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(bb) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(cc) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(dd) "Rights" shall have the meaning set forth in the WHEREAS clause at the
beginning of this Agreement.
(ee) "Rights Agent" shall mean the Person named as the "Rights Agent" in
the first paragraph of this Agreement until a successor Rights Agent shall have
become such pursuant to the applicable provisions hereof, and thereafter "Rights
Agent" shall mean such successor Rights Agent. If at any time there is more than
one Person appointed by the Company as Rights Agent pursuant to the applicable
provisions of this Agreement, "Rights Agent" shall mean and include each such
Person.
(ff) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(gg) "Section 11(a)(ii) Event" shall have the meaning set forth in Section
11(a)(ii) hereof.
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ii) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(jj) "Share Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided, however that, if such Person is deemed not to be an Acquiring Person
pursuant to clause (y) of Section 1(a) hereof, no Share Acquisition Date shall
be deemed to have occurred.
(kk) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
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(ll) "Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which an amount of voting securities sufficient to elect at
least a majority of the directors (or comparable body) of such corporation or
other entity is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(mm) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(nn) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(oo) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Company Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time act as a Co-Rights Agent or appoint one or more
Co-Rights Agents as it may deem necessary or desirable. Any actions which may be
taken by the Rights Agent pursuant to the terms of this Agreement may be taken
by any such Co-Rights Agent. To the extent that any Co-Rights Agent takes any
action pursuant to this Agreement, such Co-Rights Agent will be entitled to all
of the rights and protections of, and subject to all of the applicable duties
and obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement.
Section 3. Issuance of Rights.
(a) Until the earlier of (i) the close of business on the tenth Business
Day (or such later date as may be determined by the Board) after the Share
Acquisition Date (or, if the tenth Business Day after the Share Acquisition Date
occurs before the Record Date, the close of business on the Record Date), or
(ii) the close of business on the tenth Business Day (or such later date as may
be determined by action of the Board) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit or share ownership plan of the Company or of any Subsidiary of
the Company, or any Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2 of the General Rules and Regulations
under the Exchange Act, if, upon consummation thereof, such Person would be the
Beneficial Owner of shares representing 30% or more of the total voting power of
the Company then outstanding, (the earlier of (i) and (ii) being herein referred
to as the "Distribution Date"), (x) the Rights will be evidenced by the
certificates for the Company Common Shares registered in the names of the
holders of the Company Common Shares (which certificates for Company Common
Shares shall be deemed also to be Rights Certificates) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying Company Common Shares (including a transfer to
the Company). As soon as practicable after the Distribution Date, the Company
will prepare and execute, and the Rights Agent will countersign and send by
first-class, insured, postage prepaid mail, to each record holder of the Company
Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
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certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each Company Common Share so held,
subject to adjustment as provided herein. With respect to certificates for the
Company Common Shares outstanding as of the close of business on the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Company Common Shares and the registered holders of the
Company Common Shares shall also be the registered holders of the associated
Rights. In addition, in connection with the issuance or sale of Company Common
Shares following the Distribution Date and prior to the redemption or expiration
of the Rights, the Company (i) shall, with respect to Company Common Shares so
issued or sold pursuant to the exercise of share options or under any employee
benefit plan or arrangement, or upon the exercise, conversion or exchange of
securities granted or issued by the Company prior to the Distribution Date, and
(ii) may, in any other case, if deemed necessary or appropriate by the Board,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (x) no such
Rights Certificate shall be issued if, and to the extent that, the Company
determines, after receiving advice from counsel, that such issuance would create
a significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (y) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof. In the event
that an adjustment in the number of Rights per Company Common Share has been
made pursuant to Sections 11(i) or 11(p) hereof, at the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by the Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C, by first-class, postage
prepaid mail, to each record holder of the Company Common Shares as of the close
of business on the Record Date, at the address of such holder shown on the
records of the Company. The failure to send a copy of the Summary of Rights
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of the Rights.
(c) Rights shall be issued (i) in respect of all Company Common Shares that
are issued (either as an original issuance or from the Company's treasury) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date and (ii) in connection with the issuance or sale of Company
Common Shares following the Distribution Date and prior to the redemption or
expiration of the Rights (x) with respect to Company Common Shares so issued or
sold pursuant to the exercise of share options or under any employee benefit
plan or arrangement, or upon the exercise, conversion or exchange of securities,
granted or issued by the Company prior to the Distribution Date and (y) with
respect to Company Common Shares so issued or sold in any other case, if deemed
necessary or appropriate by the Board. Certificates representing such Company
Common Shares (including, without limitation, certificates issued upon transfer
or exchange of Company Common Shares) shall also be deemed to be certificates
for Rights, and shall bear the following legend:
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This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between Invacare Corporation (the "Company") and
National City Bank (the "Rights Agent") dated July 8, 2005,
as the same may be amended, restated or renewed from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge within five business days after receipt of a written
request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date and (ii) the Expiration Date, the Rights
associated with the Company Common Shares represented by such certificates shall
be evidenced by such certificates alone and registered holders of Company Common
Shares shall also be the registered holders of the associated Rights.
Notwithstanding this Section 3(c), the omission of a legend shall not affect the
enforceability of any part of this Rights Agreement or the rights of any holder
of the Rights.
(d) Until the earlier of the Distribution Date and the Expiration Date, the
transfer of any certificates representing Company Common Shares in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such Company Common Shares. In the event that the Company
purchases or acquires any Company Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such Company Common Shares
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Company Common Shares which are no
longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase,
certification and assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or over-the-counter market on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 7, 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall entitle the holders thereof to purchase such number of one
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one-thousandths of a Preferred Share as shall be set forth therein at the price
set forth therein (such exercise price per one one-thousandth of a share, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any (x) Rights Certificate issued pursuant to Section 3, Section 11(i)
or Section 22 hereof that represents Rights beneficially owned by persons known
to be: (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
(whether or not in writing) that has as a primary purpose or effect avoidance of
Section 7(e) hereof, and (y) any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President, either manually or
by facsimile signature, and shall 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 Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept, at its office designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
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number of Rights evidenced on its face by each of the Rights Certificates, the
Rights Certificate number and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
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 Rights Certificate
or Certificates (other than Rights Certificates representing Rights that have
become void pursuant to Section 7(e) hereof or that have been exchanged pursuant
to Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a Preferred Share (or,
following a Triggering Event, Common Shares, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged,
with the form of assignment and certificate appropriately executed, at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights 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 Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a Preferred Share (or other shares, securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earliest of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date") and (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof (the earliest of (i), (ii) and (iii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $180.00 and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a Preferred Share (or other shares, securities,
cash or other assets, as the case may be) to be purchased and an amount equal to
any applicable transfer tax, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-thousandths of a
Preferred Share to be purchased and the Company hereby authorizes its transfer
agent to comply with such requests, or (B) if the Company shall have elected to
deposit the total number of Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such requests, (ii) requisition from the Company the amount
of cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made in cash or by certified bank check or
money order payable to the order of the Company. In the event that the Company
is obligated to issue other securities (including Common Shares) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company shall 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.
11
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
(whether or not in writing) that has as a primary purpose or effect avoidance of
this Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. No Rights
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Rights Certificate delivered to the
Rights Agent for transfer to an Acquiring Person or any Associate or Affiliate
thereof whose Rights would be void pursuant to the preceding sentence shall be
cancelled. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights 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.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported transfer or
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of assignment or
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such assignment or exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
any Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
12
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) 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.
(b) So long as the Preferred Shares (and, following the occurrence of a
Section 11(a)(ii) Event, Common Shares and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange or automated quotation system, the Company shall use its
commercially reasonable efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be so listed upon
official notice of issuance upon such exercise.
(c) The Company shall use its commercially reasonable efforts to (i) file,
as soon as practicable following the earliest date after the first occurrence of
a Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Act,
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date, and (iv) obtain
such other regulatory approvals as may be necessary for it to issue securities
purchasable upon the exercise of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective
or to obtain any other required regulatory approval in connection with the
exercisability of the Rights. Upon 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 registration or qualification in such
jurisdiction shall have been effected or obtained.
13
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-thousandths of a Preferred Share
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon proper exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-thousandths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required (i) to pay any transfer tax
that may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of
one one-thousandths of a Preferred Share (or Common Shares and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or (ii) to issue or deliver any certificates for a number of one
one-thousandths of a Preferred Share (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for a number of one one-thousandths of a Preferred Share (or Common
Shares and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such fractional Preferred Shares (or Common Shares and/or other securities,
as the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered with the forms of election and certification duly executed and
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares (or Common Shares and/or other securities, as the
case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Shares (or Common Shares and/or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a shareholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
14
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of shares,
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of Preferred
Shares or shares of capital stock, as the case may be, issuable 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 the
Purchase Price then in effect, the aggregate number and kind of Preferred
Shares or shares of capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person, alone or together with its
Affiliates or Associates, becomes an Acquiring Person, then, subject to
Section 24 of this Agreement, promptly following the later of the
occurrence of the Share Acquisition Date and the Distribution Date (such
event is referred to herein as a "Section 11(a)(ii) Event"), proper
provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the right to
receive (subject to the last sentence of Section 23(a)), upon exercise of
such Right at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-thousandths of a
Preferred Share, such number of Common Shares of the Company that equals
the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per
Common Share on the date of such first occurrence (such number of shares,
the "Adjustment Shares").
(iii) In the event that the number of Common Shares 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 are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in (or repayment of) the Purchase Price, (3) Common Shares or
other equity securities of the Company (including, without limitation,
15
preferred shares, or units of preferred shares, which the Board has deemed
to have the same value as Common Shares (such preferred shares, "common
share equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized investment banking
firm selected by the Board; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of
a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board shall
determine in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (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 period, as
it may be extended, the "Substitution Period"). To the extent that the
Company determines that some action needs to be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, 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 Shares
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per Common Share on the Section 11(a)(ii) Trigger Date and the
value of any "common share equivalent" shall be deemed to have the same
value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or per equivalent preferred
share (or having a conversion price per share, if a security convertible into
Preferred Share or equivalent preferred share) less than the current market
price (as determined pursuant to Section 11(d) hereof) per Preferred Share on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares outstanding on such record date,
plus the number of additional Preferred Shares and/or equivalent preferred
16
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
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 Preferred Shares, but including any dividend
payable in shares other than Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Preferred Share on such record
date, less the fair market value (as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a Preferred Share and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per Preferred Share on such record date. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per Common Share on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "current market price" per
Common Share on any date shall be deemed to be the average of the daily
closing prices per share of such Common Shares for the ten (10) consecutive
Trading Days immediately following such date; provided, however, that in
the event that the current market price per share of the Common Shares is
determined during a period following the announcement by the issuer of such
Common Shares of (A) a dividend or distribution on such Common Shares
payable in such Common Shares or securities convertible into such Common
Shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification
occurs, then, and in each such case, the "current market price" shall be
17
properly adjusted to take into account ex-dividend or post record date
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and the low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market, Inc.
("Nasdaq") or such other system then in use, or, if on any such date the
Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board. All references
in this Section to closing prices, last quoted prices or other stock prices
mean prices during regular trading hours, without giving effect to any
after-hours or extended hours trading. If on any such date no market maker
is making a market in the Common Shares, the fair value of such shares on
such date shall be as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. The term "Trading Day" shall mean
a day on which Nasdaq or any national securities exchange on which the
Common Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Shares are not listed or admitted to trading
on Nasdaq or any national securities exchange, a Business Day. If the
Common Shares are 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, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" per Preferred Share shall be determined in the same manner as set
forth above for the Common Shares in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the current market price per
Preferred Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market price"
per Preferred Share shall be conclusively deemed to be an amount equal to
1,000 (as such number may be appropriately adjusted for such events as
share splits, share dividends and recapitalizations with respect to the
Common Shares occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Shares. If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or traded,
"current market price" per share of the Preferred Shares shall mean the
fair value per share as determined in good faith by the Board, which
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. For all purposes of this
Agreement, the "current market price" of one one-thousandth of a Preferred
Share shall be equal to the "current market price" of one Preferred Share
divided by 1,000.
(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 one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-millionth of a Preferred Share, or
18
hundred-thousandth of a Common Share or other security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any securities other than Preferred Shares, thereafter the
number of such other securities so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Shares shall apply on like terms to any
such other securities; provided, however, that the Company shall not be liable
for its inability to reserve and keep available for issuance upon exercise of
the Rights pursuant to Section 11(a)(ii) a number of Common Shares greater than
the number then authorized by the Company's Articles of Incorporation but not
outstanding or reserved for other purposes.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a Preferred Share (calculated to the nearest ten-millionth) obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by a Right
immediately prior to this 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 lieu of any adjustment in the
number of one one-thousandths of a Preferred Share 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 one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
19
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 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
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a Preferred Share issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-thousandth of a share and the
number of one one-thousandths of a share which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
one-thousandths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such number of one one-thousandths of a fully paid and nonassessable Preferred
Share 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 number
of one one-thousandths of a Preferred Share and other shares of capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a Preferred Share and other shares of
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) share dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders.
20
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any charter or bylaw provisions or
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 or sale, 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. The Company shall not consummate any consolidation, merger, sale or
transfer described in clause (i), (ii) or (iii) of the prior sentence unless
prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(n).
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23, Section 24 or Section 27 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 otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) 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 or pay any dividend on the outstanding Company
Common Shares payable in Company Common Shares, (ii) subdivide the outstanding
Company Common Shares, or (iii) combine the outstanding Company Common Shares
into a smaller number of shares, the number of Rights associated with each
Company Common Share then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each Company Common Share following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each Company Common Share immediately prior to such event
by a fraction, the numerator of which shall be the number of Company Common
Shares outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the number of Company Common Shares outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent, and with each transfer agent for the Preferred
Shares and the Company Common Shares, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing Company
Common Shares) in accordance with Section 26 hereof. The Rights Agent shall be
21
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, at any time after a Person has become an Acquiring
Person, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding Company Common Shares shall be changed into or
exchanged for shares or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o) hereof), then, and in each such case, proper provision shall
be made so that from and after the latest of the Share Acquisition Date, the
Distribution Date and the occurrence of such event: (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, non-assessable and freely tradeable Common Shares of the
Principal Party (as such term is hereinafter defined), which shall not be
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and (2) dividing that
product (which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to Section
11(d)(i) hereof) per Common Share of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that, subject to clause (v) below, the provisions
of Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
22
Common Shares thereafter deliverable upon the exercise of the Rights; and (v)
the provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Company Common Shares are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation, and (ii) in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (1) if the Common Shares
of such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person the
Common Shares of which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Shares which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will (i) prepare and file a registration
statement under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date, (ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate, and (iii) deliver to
holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or sales or
other transfers. In the event that a Section 13 Event shall occur at the same
time as, or at any time after, the occurrence of a Section 11(a)(ii) Event, the
23
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(i) or (p) hereof, or to
distribute Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and the low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board. All references in this Section to closing prices, last
quoted prices or other stock prices means prices during regular trading hours,
without giving effect to any after-hours or extended hours trading. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board shall be
used, which determination shall be described in a statement filed with Rights
Agent and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
that evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). Fractional
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts;
provided, however, that holders of such depositary receipts shall have all of
the designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share), the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth of a Preferred Share. For purposes of this
Section 14(b), the current market value of one one-thousandth of a Preferred
Share shall be one one-thousandth of the closing price of a Preferred Share (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
24
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of Common Shares upon exercise of the Rights or
to distribute certificates which evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market price of one (1)
Common Share (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action expressly given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Company Common Shares); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Company Common Shares), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Company Common Shares), may, in his
own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights 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
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Company Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly completed and fully executed and otherwise in accordance with Section 6 of
this Agreement;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Company Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Company Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the penultimate
sentence of Section 7(e) hereof, shall be required to be affected by any notice
to the contrary;
25
(d) the holder of a Right by the acceptance of such Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by Section 14 of this Agreement; and
(e) 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
obligation; provided, however, that the Company must use reasonable efforts to
prevent the issuance of any such order, decree or ruling and to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17.Rights Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of one one-thousandths of
a Preferred Share or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and 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 for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability. The indemnity provided for herein shall survive the expiration of the
Rights, the termination of this Agreement, and the resignation or removal of the
Rights Agent. The reasonable costs and expenses of enforcing this right of
indemnification shall also be paid by the Company.
(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 good faith in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Company Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
26
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document reasonably believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
(c) Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for any special, indirect or consequential
losses or damages of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such 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 Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions (and no implied duties or obligations, except the duty of good faith,
shall be read into this Agreement against the Rights Agent), by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the Rights Agent
may consult with competent legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
27
(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 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, any Vice President, the Chief Financial
Officer, the Secretary or any Assistant 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 omitted 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 Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11,
Section 13 or Section 24 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment, delivered pursuant to Section 12); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Company Common Shares or Preferred Shares to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any Company Common Shares or Preferred Shares will, when so 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
reasonable 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, any Vice President or the Chief Financial
Officer 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 waiting for such instructions.
28
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent or any of its Affiliates may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any of its Affiliates from acting in any other capacity for the Company
or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be 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, however, reasonable care was exercised in the
selection and continued employment 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 (other than internal costs incurred
by the Rights Agent in providing services to the Company in the ordinary course
of its business as Rights Agent) 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 Rights Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has not been completed, such assignment or election to purchase will not
be honored and the Rights Agent will not take any further action with respect to
such requested exercise, transfer, split up, combination or exchange without
first consulting with the Company, and will thereafter take further action with
respect thereto only in accordance with the Company's written instructions.
(l) The Rights Agent shall promptly remit to the Company any funds paid to
it upon exercise of the Rights pursuant to Section 7 hereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Company Common Shares and Preferred Shares, by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Company
Common Shares and Preferred Shares, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
29
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States (or of any state of the United
States) 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
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. 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 Company Common
Shares and the Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
Section 23. Redemption.
(a) The Board may, at its option, at any time prior to the earlier of (i)
the close of business on the tenth Business Day (or such later date as may be
determined by the Board pursuant to clause (i) of the first sentence of Section
3(a) with respect to the Distribution Date) following the Share Acquisition Date
(or, if the Share Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth Business Day following the Record Date) and
(ii) the Final Expiration Date, direct the Company to, and if directed, the
Company shall, 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 share split, share dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Board may be made effective at such time, on such basis and with such conditions
as the Board in its sole discretion may establish. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the "current
market price," as defined in Section 11(d)(i) hereof, of the Common Shares at
the time of redemption) or any other form of consideration, or any combination
of any of the foregoing, deemed appropriate by the Board. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired.
30
(b) Immediately upon the effectiveness of the Board action ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent and without any further action and without any notice, the right to
exercise the Rights shall terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the effectiveness of the Board action ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice, by
first-class mail, to all such holders at each holder's last address 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 for the Company
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
(c) In the event of a redemption of the Rights in accordance with this
Agreement, the Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Company Common Shares, and upon such action, all outstanding Rights and
Right Certificates shall be null and void without any further action by the
Company.
Section 24. Exchange.
(a) The Board may, at its option, at any time after a Section 11(a)(ii)
Event, exchange all or part of the then outstanding and exercisable Rights
(which (i) shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof, and (ii) shall include, without limitation,
any Rights issued after the Distribution Date) for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any share
split, share dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Company Common Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of shares representing 50% or more of the total voting
power of the Company then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24, evidence of which shall
have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number
of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange, by first-class mail, to all
of the holders of such Rights at their last addresses as they appear upon the
31
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute, for each Common Share exchangeable for Rights, a number
of Preferred Shares (or equivalent preferred shares, as such term is defined in
Section 11(b) hereof), such that the current market price of one Preferred Share
(or equivalent preferred share) (as determined in accordance with Section
11(d)(ii) hereof) multiplied by such number is equal to the current market price
of one Common Share (as determined in accordance with Section 11(a)(i) hereof)
as of the Trading Day immediately preceding the date of exchange pursuant to
this Section 24.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action within its control as may be necessary to
authorize additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. In lieu
of such fractional Common Shares, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
subsection (e), the current market value of a whole Common Share shall be the
closing price per Common Share (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 this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in shares of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (other than regular quarterly cash dividends), or (ii) to offer to the
holders of Preferred Shares rights or warrants to subscribe for or to purchase
any additional Preferred Shares or shares of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
32
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such share dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
(b) In case a Section 11(a)(ii) Event shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred Shares
shall be deemed thereafter to refer also to Common Shares and/or, if
appropriate, other securities; provided that the failure to give such notice
shall not affect the validity of such consent.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by registered
mail, postage prepaid, or via a reputable nationwide overnight courier service,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Invacare Corporation
Xxx Xxxxxxxx Xxx
Xxxxxx, Xxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx, Halter & Xxxxxxxx LLP
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by registered mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
33
National City Bank
Corporate Trust Administration
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
Company Common Shares) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, 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.
From and after the time at which the Rights cease to be redeemable pursuant to
Section 23 of this Agreement, and subject to the last sentence of this Section
27, the Company may, and the Rights Agent will if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
or Company Common Shares in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to supplement or amend the provisions hereunder in any manner
which the Company may deem desirable; provided, however, that no such supplement
or amendment shall adversely affect the interests of the holders of Rights as
such (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person), and no such supplement or amendment shall cause the Rights
again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the foregoing, (x)
this Agreement may be supplemented or amended to provide for such voting powers
for the Rights and such procedures for the exercise thereof, if any, as the
Board of Directors of the Company may determine to be appropriate, and (y) the
Company may at any time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the thresholds set forth in Sections 1(a)
and 3(a) to not less than the greater of (i) the sum of .001% and the largest
percentage of the total outstanding voting power then known by the Company to be
held (beneficially or otherwise) by any Person and (ii) 15%. Upon the delivery
of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment. Any
supplement or amendment that the Rights Agent is required to sign pursuant to
this Section 27 shall be effective upon execution by the Company (whether or not
then executed by the Rights Agent or the certificate referred to in the
immediately preceding sentence has been delivered). Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Company Common Shares. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment that changes the rights
34
and duties of the Rights Agent under this Agreement will be effective against
the Rights Agent without the execution of such supplement or amendment by the
Rights Agent.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Actions by the Board, etc. The Board shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or 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 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) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board to any liability to any holder of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Company Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Company Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid, void or unenforceable
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board. Without limiting the
foregoing, if any provision of this Agreement requiring that a determination be
made by the Board is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall then be
made by the entire Board in accordance with applicable law and the Articles of
Incorporation and Code of Regulations of the Company, each as then in effect.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Ohio and for all purposes shall be governed by and
construed in accordance with the laws of Ohio applicable to contracts made and
to be performed entirely within Ohio.
35
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: INVACARE CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ A. Xxxxxxx Xxxxx, III
------------------------------ -------------------------
Name: Xxxxx X. Xxxxxx Name: A. Xxxxxxx Xxxxx, III
Title: Chairman and Chief Executive Officer
Attest: NATIONAL CITY BANK
By: /s/ Xxxxxx X. XxXxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------ --------------------------
Name: Xxxxxx X. XxXxxxx Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
37
FORM OF
CERTIFICATE OF AMENDMENT
BY DIRECTORS OR INCORPORATORS TO ARTICLES
OF INVACARE CORPORATION
RESOLVED: That pursuant to the authority granted to and vested in the Board
in accordance with the provisions of the Ohio General Corporation Law and by
Article IV of the Amended and Restated Articles of Incorporation of the
Corporation, as amended, such Article IV is hereby amended to add the following
to the end of Subdivision A of Article IV providing that, of the three hundred
thousand (300,000) authorized but unissued Serial Preferred Shares, without par
value, of the Corporation (the "Serial Preferred Shares"), one hundred twelve
thousand (112,000) of the Serial Preferred Shares shall be designated as a
series of Serial Preferred Shares, and that the designation and number of such
series of shares, and the relative rights, preferences and limitations thereof
are as follows:
Series A Participating Serial Preferred Shares:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Serial Preferred Shares" (the "Series A
Preferred Shares") and the number of shares constituting the Series A Preferred
Shares shall be one hundred twelve thousand (112,000). Such number of shares may
be increased or decreased by resolution of the Board prior to issuance;
provided, that no decrease shall reduce the number of Series A Preferred Shares
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Shares.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Serial Preferred Shares (or any similar shares) ranking prior and superior to
the Series A Preferred Shares with respect to dividends, the holders of Series A
Preferred Shares, in preference to the holders of Common Shares, without par
value, of the Corporation and Class B Common Shares, without par value, of the
Corporation (collectively, the "Common Shares"), and of any other junior shares,
shall be entitled to receive, when, as and if declared by the Board out of funds
of the Corporation legally available for the payment of dividends, quarterly
dividends payable in cash on the last day of each fiscal quarter of the
Corporation in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a Series A Preferred Share or fraction
of a Series A Preferred Share, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
A-1
reclassification or otherwise), declared on the Common Shares, without par
value, of the Corporation since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any Series A Preferred Share or fraction of a Series
A Preferred Share. In the event the Corporation shall at any time declare or pay
any dividend on the Common Shares payable in Common Shares, or effect a
subdivision, combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount to which holders of Series A Preferred Shares were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event. In the event the Corporation shall at any time declare or pay any
dividend on the Series A Preferred Shares payable in Series A Preferred Shares,
or effect a subdivision, combination or consolidation of the outstanding Series
A Preferred Shares (by reclassification or otherwise than by payment of a
dividend in Series A Preferred Shares) into a greater or lesser number of Series
A Preferred Shares, then in each such case the amount to which holders of Series
A Preferred Shares were entitled immediately prior to such event under clause
(b) of the first sentence of this Section 2(A) shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Series A
Preferred Shares that were outstanding immediately prior to such event and the
denominator of which is the number of Series A Preferred Shares outstanding
immediately after such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Shares as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares) and the Corporation shall pay such dividend
or distribution on the Series A Preferred Shares before the dividend or
distribution declared on the Common Shares is paid or set apart; provided that,
in the event no dividend or distribution shall have been declared on the Common
Shares during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on
the Series A Preferred Shares shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding Series
A Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of Series A
Preferred Shares entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
Series A Preferred Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board may fix a record date for the determination of holders of Series A
Preferred Shares entitled to receive payment of a dividend or distribution
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declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Series A Preferred Shares shall
have the following voting rights:
(A) Each Series A Preferred Share shall entitle the holder thereof to one
(1) vote on all matters submitted to a vote of the shareholders of the
Corporation. Fractional Series A Preferred Shares shall not entitle the holder
thereof to any vote on any matter submitted to a vote of the shareholders of the
Corporation.
(B) Except as otherwise provided herein, in the Amended and Restated
Articles of Incorporation, as amended, or Code of Regulations, as amended, the
holders of Series A Preferred Shares and the holders of Common Shares and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of shareholders of the
Corporation.
(C) (i) If at any time dividends on any Series A Preferred Shares shall be
in arrears in an amount equal to six quarterly dividends thereon, the
holders of the Series A Preferred Shares, voting as a separate series from
all other series of Serial Preferred Shares and classes of capital stock,
shall be entitled to elect two members of the Board in addition to any
Directors elected by any other series, class or classes of securities and
the authorized number of Directors will automatically be increased by two.
Promptly thereafter, the Board of the Corporation shall, as soon as may be
practicable, call a special meeting of holders of Series A Preferred Shares
for the purpose of electing such members of the Board. Such special meeting
shall in any event be held within 45 days of the occurrence of such
arrearage.
(ii) During any period when the holders of Series A Preferred Shares,
voting as a separate series, shall be entitled and shall have exercised
their right to elect two Directors, then, and during such time as such
right continues, (a) the then authorized number of Directors shall be
increased by two, and the holders of Series A Preferred Shares, voting as a
separate series, shall be entitled to elect the additional Directors so
provided for, and (b) each such additional Director shall not be a member
of any existing class of the Board, but shall serve until the next annual
meeting of shareholders for the election of Directors, or until his
successor shall be elected and shall qualify, or until his right to hold
such office terminates pursuant to the provisions of this Section 3(C).
(iii) A Director elected pursuant to the terms hereof may be removed
with or without cause by the holders, and only by the holders, of Series A
Preferred Shares entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of shareholders
for the election of Directors and while the holders of Series A Preferred
Shares shall be entitled to elect two Directors, there is no such Director
in office by reason of resignation, death or removal, then, promptly
thereafter, the Board shall call a special meeting of the holders of Series
A Preferred Shares for the purpose of filling such vacancy and such vacancy
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shall be filled at such special meeting. Such special meeting shall in any
event be held within 45 days of the occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any Series A Preferred Shares outstanding are
paid, and, in addition thereto, at least one regular dividend has been paid
subsequent to curing such arrearage, the term of office of any Director
elected pursuant to this Section 3(C), or his successor, shall
automatically terminate, and the authorized number of Directors shall
automatically decrease by two, the rights of the holders of Series A
Preferred Shares to vote as provided in this Section 3(C) shall cease,
subject to renewal from time to time upon the same terms and conditions,
and the holders of Series A Preferred Shares shall have only the limited
voting rights elsewhere herein set forth.
(D) Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Shares shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Shares as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Shares as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on Series A Preferred Shares outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Shares;
(ii) declare or pay dividends, or make any other distributions, on any
shares ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Shares, except
dividends paid ratably on the Series A Preferred Shares and all such parity
shares on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration any
shares ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Shares, provided that
the Corporation may at any time redeem, purchase or otherwise acquire any
such junior shares in exchange for any shares of the Corporation ranking
junior (as to dividends and upon dissolution, liquidation or winding up) to
the Series A Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for consideration any
Series A Preferred Shares, or any shares ranking on a parity with the
Series A Preferred Shares, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board) to all holders of
such shares upon such terms as the Board, after consideration of the
respective annual dividend rates and other relative rights and preferences
A-4
of the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of the Corporation
unless the Corporation could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Series A Preferred Shares purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued Serial Preferred Shares and
may be reissued as part of a new series of Serial Preferred Shares subject to
the conditions and restrictions on issuance set forth herein, in the Amended and
Restated Articles of Incorporation, as amended, or in any other Certificate of
Amendment creating a series of Serial Preferred Shares or any similar shares or
as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares
shall have received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of Series A Preferred Shares shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of Common Shares, or (2) to the holders of
shares ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Shares, except
distributions made ratably on the Series A Preferred Shares and all such parity
shares in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.
(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other corporation nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.
(C) In the event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in Common Shares, or effect a subdivision,
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event under the proviso in clause (1) of paragraph (A)
of this Section 6 shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event. In the event the
A-5
Corporation shall at any time declare or pay any dividend on the Series A
Preferred Shares payable in Series A Preferred Shares, or effect a subdivision,
combination or consolidation of the outstanding shares of Series A Preferred
Shares (by reclassification or otherwise than by payment of a dividend in Series
A Preferred Shares) into a greater or lesser number of Series A Preferred
Shares, then in each such case the aggregate amount to which holders of Series A
Preferred Shares were entitled immediately prior to such event under the proviso
in clause (1) of paragraph (A) of this Section 6 shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
Series A Preferred Shares that were outstanding immediately prior to such event
and the denominator of which is the number of Series A Preferred Shares
outstanding immediately after such event.
Section 7. Consolidation, Merger, etc. Notwithstanding anything to the
contrary contained herein, in case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other shares or securities, cash and/or
any other property, then in any such case each Series A Preferred Share shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount of shares, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is changed or exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision, combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of Series A Preferred Shares shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event. In the
event the Corporation shall at any time declare or pay any dividend on the
Series A Preferred Shares payable in Series A Preferred Shares, or effect a
subdivision, combination or consolidation of the outstanding Series A Preferred
Shares (by reclassification or otherwise than by payment of a dividend in Series
A Preferred Shares) into a greater or lesser number of Series A Preferred
Shares, then in each such case the amount set forth in the first sentence of
this Section 7 with respect to the exchange or change of Series A Preferred
Shares shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of Series A Preferred Shares that were outstanding
immediately prior to such event and the denominator of which is the number of
Series A Preferred Shares outstanding immediately after such event.
Section 8. No Redemption. The Series A Preferred Shares shall not be
redeemable.
Section 9. Rank. The Series A Preferred Shares shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Serial Preferred Shares issued either before or after the
issuance of the Series A Preferred Shares, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. At such time as any Series A Preferred Shares are
outstanding, the Amended and Restated Articles of Incorporation of the
Corporation, as amended, shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
A-6
Series A Preferred Shares so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding Series A Preferred
Shares, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Shares.
* * * * *
A-7
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER JULY 8, 2015 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.](1)
Invacare Corporation
Rights Certificate
This certifies that ____________, or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated July 8, 2005 (the "Rights Agreement"), between Invacare
Corporation, an Ohio corporation (the "Company"), and National City Bank, a
national banking association (the "Rights Agent"), to purchase from the Company
after the Distribution Date (as such term is defined in the Rights Agreement)
and at any time prior to 5:00 p.m. (Cleveland, Ohio time) on July 8, 2015 at the
office of the Rights Agent designated for such purpose, or its successor(s) as
Rights Agent, one one-thousandth of a fully paid, non-assessable Series A
Participating Serial Preferred Share (the "Preferred Shares") of the Company,
without par value, at a purchase price of $180.00 in cash per one one-thousandth
of a share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of one one-thousandth of a Preferred Share which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of the close of business on July 8, 2005,
based on the Preferred Shares as constituted at such date. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Rights Agreement.
-----------------
(1) The rights of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced by
this Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after the Acquiring Person
becomes an Acquiring Person, or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of a person who, concurrently with or after
such transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and kind
of Preferred Shares or other securities which may be purchased upon the exercise
of the Rights evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events, including Section 11(a)(ii)
Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal offices of the
Company and are available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, with
the Form of Election and Certificate set forth on the reverse side duly
executed, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a Preferred Share as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at a redemption price
of $.001 per Right at any time prior to the earlier of (i) the close of business
on the tenth Business Day (or such later date as may be determined by the Board
pursuant to clause (i) of the first sentence of Section 3(a) with respect to the
Distribution Date) following the Share Acquisition Date (or, if the Share
Acquisition Date shall have occurred prior to the Record Date, the close of
business on the tenth Business Day following the Record Date) and (ii) the Final
Expiration Date.
Subject to the provisions of the Rights Agreement, the Company may, at its
option, at any time after a Section 11(a)(ii) Event, exchange all or part of the
Rights evidenced by this Certificate for the Company's Common Shares or for
Preferred Shares (or shares of a class or series of the Company's preferred
shares having the same rights, privileges and preferences as the Preferred
Shares).
B-2
No fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _______________
ATTEST: INVACARE CORPORATION
By:
---------------------------------- ----------------------------------
Secretary Title:
COUNTERSIGNED:
NATIONAL CITY BANK
By:
----------------------------------
Authorized Signature
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________________ hereby sells,
assigns and transfers unto
--------------------------------------------------------------------------------
(Please print name and address of transferee)
_________________________________________________________________________ this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ________________
Signature
-----------------------------
Signature Guaranteed:
Certificate
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by, or being assigned to, an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined pursuant
to the Rights Agreement).
Dated: ______________
Signature
-----------------------------
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: National City Bank
The undersigned hereby irrevocably elects to exercise ___________ Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of and
delivered to:
Please insert social security
or other identifying number __________________________________________________
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
If such number of Rights being exercised shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number __________________________________________________
-------------------------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------------------
Dated: ______________
Signature
-----------------------------
Signature Guaranteed:
B-5
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate thereof.
Dated: _______________
Signature
-----------------------------
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
SUMMARY OF RIGHTS TO
PURCHASE PREFERRED SHARES
Effective July 8, 2005, the Board of Directors of Invacare Corporation (the
"Company") adopted a new shareholder rights plan, as set forth in the Rights
Agreement, dated July 8, 2005, between the Company and National City Bank, as
Rights Agent (the "Rights Agreement"). The Rights Agreement replaces the
Company's previous shareholder rights plan which expired on July 7, 2005. In
order to implement the new Rights Agreement, the Board of Directors declared a
dividend of one Right for each outstanding share of the Company's Common Shares
and Class B Common Shares to shareholders of record at the close of business on
July 19, 2005 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a Series A Participating Serial
Preferred Share, without par value (the "Preferred Shares"), at a Purchase Price
of $180.00 in cash, subject to adjustment. The new Rights replace the rights
that were outstanding pursuant to the Company's previous shareholder rights
plan, which rights expired in accordance with their terms on July 7, 2005. The
description and terms of the Rights are set forth in the Rights Agreement.
Initially, the Rights are not exercisable and will be attached to all
certificates representing outstanding Common Shares and Class B Common Shares,
and no separate Rights Certificates will be distributed. The Rights will
separate from the Common Shares and Class B Common Shares, and the Distribution
Date will occur, upon the earlier of (i) 10 business days following the first
date of a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of shares representing 30% or more of the outstanding
voting power of the Company (the "Share Acquisition Date"), or (ii) 10 business
days following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning shares representing 30% or more
of the outstanding voting power of the Company. The Distribution Date may be
deferred in circumstances determined by the Board of Directors. In addition,
certain inadvertent acquisitions will not trigger the occurrence of the
Distribution Date. Until the Distribution Date (or earlier redemption or
expiration of the Rights), (i) the Rights will be evidenced by the certificates
for Common Shares and Class B Common Shares outstanding on the Record Date,
together with this Summary of Rights, or by new certificates for Common Shares
and Class B Common Shares issued after the Record Date which contain a notation
incorporating the Rights Agreement by reference, (ii) the Rights will be
transferred with and only with such certificates for Common Shares and Class B
Common Shares; and (iii) the surrender for transfer of any certificates for
Common Shares or Class B Common Shares outstanding (with or without a copy of
this Summary of Rights or such notation) will also constitute the transfer of
the Rights associated with the Common Shares or Class B Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire upon
the close of business on July 8, 2015 (the "Final Expiration Date") unless
earlier redeemed or exchanged as described below. As soon as practicable after
the Distribution Date, separate Rights Certificates will be mailed to holders of
record of the Common Shares and Class B Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
C-1
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, and except for Common Shares and Class B Common Shares
issued upon exercise, conversion or exchange of then outstanding options,
convertible or exchangeable securities or other contingent obligations to issue
shares or pursuant to any employee benefit plan or arrangement, only Common
Shares and Class B Common Shares issued prior to the Distribution Date will be
issued with Rights.
In the event that any Person becomes an Acquiring Person, then, promptly
following the occurrence of the later of the Share Acquisition Date and the
Distribution Date, each holder of a Right (except as provided below and in
Section 7(e) of the Rights Agreement) shall thereafter have the right to
receive, upon exercise, that number of Common Shares of the Company (or, in
certain circumstances, cash, property or other securities of the Company) which
equals the exercise price of the Right divided by 50% of the current market
price (as defined in the Rights Agreement) per Common Share at the date of the
occurrence of such event. However, Rights are not exercisable following such
event until such time as the Rights are no longer redeemable by the Company as
described below. Notwithstanding any of the foregoing, following the occurrence
of such event, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
null and void. The event summarized in this paragraph is referred to as a
"Section 11(a)(ii) Event."
For example, at an exercise price of $180 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following a Section 11(a)(ii)
Event would entitle its holder to purchase for $180 such number of Common Shares
(or other consideration, as noted above) as equals $180 divided by one-half of
the current market price (as defined in the Rights Agreement) of the Common
Shares. Assuming that the Common Shares had a market price of $45 per share at
such time, the holder of each valid Right would be entitled to purchase eight
Common Shares, having a market value of 8 x $45, or $360, for $180.
In the event that, at any time after any Person becomes an Acquiring Person, (i)
the Company is consolidated with, or merged with and into, another entity and
the Company is not the surviving entity of such consolidation or merger or if
the Company is the surviving entity, but its outstanding Common Shares are
changed or exchanged for shares or securities (of any other person) or cash or
any other property, or (ii) more than 50% of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall, after the latest of the
Share Acquisition Date, the Distribution Date and the occurrence of such event,
have the right to receive, upon exercise, that number of common shares of the
acquiring company which equals the exercise price of the Right divided by 50% of
the current market price (as defined in the Rights Agreement) of such common
shares at the date of the occurrence of the event. The events summarized in this
paragraph are referred to as "Section 13 Events." A Section 11(a)(ii) Event and
Section 13 Events are collectively referred to as "Triggering Events."
For example, at an exercise price of $180 per Right, each valid Right following
a Section 13 Event would entitle its holder to purchase for $180 such number of
common shares of the acquiring company as equals $180 divided by one-half of the
current market price (as defined in the Rights Agreement) of such common shares.
Assuming that such common shares had a market price of $45 per share at such
time, the holder of each valid Right would be entitled to purchase eight common
C-2
shares of the acquiring company, having a market value of 8 x $45, or $360, for
$180.
At any time after the occurrence of a Section 11(a)(ii) Event, when no person
owns shares representing a majority of the outstanding voting power of the
Company, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such Acquiring Person which have become void), in whole or
in part, at an exchange ratio of one Common Share, or one one-thousandth of a
Preferred Share (or of a share of a class or series of the Company's preferred
shares having equivalent rights, preferences and privileges), per Right (subject
to adjustment).
The Purchase Price payable, and the number of units of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a share
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the then-current market price (as defined in the Rights Agreement) of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings) or of subscription rights
or warrants (other than those referred to above). The number of Rights
associated with each Common Share and Class B Common Share is also subject to
adjustment in the event of a share split of the Common Shares or Class B Common
Shares or a share dividend on the Common Shares or Class B Common Shares payable
in Common Shares or Class B Common Shares or subdivisions, consolidations or
combinations of the Common Shares or Class B Common Shares occurring, in any
such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional Preferred Shares (other than fractions which are integral multiples
of one one-thousandth of a Preferred Share) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
Preferred Shares purchasable upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled to receive, when, as and if declared by
the Board of Directors, a minimum preferential quarterly dividend payment of $10
per share or, if greater, an aggregate dividend of 1,000 times the dividend
declared per Common Share or Class B Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $1,000 per share, plus an amount equal to accrued and
unpaid dividends, and will be entitled to an aggregate payment of 1,000 times
the payment made per Common Share or Class B Common Share. Each Preferred Share
will have one vote, voting together with the Common Shares and Class B Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares and/or Class B Common Shares are changed or exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share or Class B Common Share. These rights are protected by customary
antidilution provisions. Because of the nature of the Preferred Shares' dividend
and liquidation rights, the value of one one-thousandth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
C-3
At any time prior to the earlier of the tenth Business Day (or such later date
as may be determined by the Board of Directors of the Company) after the Share
Acquisition Date, the Company may redeem the Rights in whole, but not in part,
at a price of $0.001 per Right (the "Redemption Price"), payable in cash or
shares. Immediately upon the redemption of the Rights or such earlier time as
established by the Board in the resolution ordering the redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price. The Rights may also be redeemable
following certain other circumstances specified in the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends. Although the distribution of the Rights should not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common shares of the acquiring company as set forth above.
Any provision of the Rights Agreement, other than the redemption price, may be
amended by the Board prior to such time as the Rights are no longer redeemable.
Once the Rights are no longer redeemable, the Board's authority to amend the
Rights is limited to correcting ambiguities or defective or inconsistent
provisions in a manner that does not adversely affect the interest of holders of
Rights.
The Rights are intended to protect the shareholders of the Company in the event
of an unfair or coercive offer to acquire the Company and to provide the Board
with adequate time to evaluate unsolicited offers. The Rights may have
anti-takeover effects. The Rights will cause substantial dilution to a person or
group that attempts to acquire the Company without conditioning the offer on a
substantial number of Rights being acquired. The Rights, however, should not
affect any prospective offeror willing to make an offer at a fair price and
otherwise in the best interests of the Company and its shareholders, as
determined by a majority of the Board. The Rights should not interfere with any
merger or other business combination approved by the Board.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to the Company's Current Report on Form 8-K dated July
8, 2005. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
C-4
