EXHIBIT 4.1
RIGHTS AGREEMENT
between
SYNOVIS LIFE TECHNOLOGIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
dated as of June 1, 2006
TABLE OF CONTENTS
Page
----
Section 1. Certain Definitions........................................ 1
Section 2. Appointment of Rights Agent................................ 9
Section 3. Issue of Rights Certificates............................... 9
Section 4. Form of Rights Certificates................................ 11
Section 5. Countersignature and Registration.......................... 12
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates............................................... 12
Section 7. Exercise of Rights; Purchase Price; Expiration Date........ 13
Section 8. Cancellation and Destruction of Rights Certificates........ 15
Section 9. Reservation and Availability of Common Shares;
Registration............................................... 15
Section 10. Common Shares Record Date.................................. 17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights........................................... 17
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares..................................................... 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.............................................. 25
Section 14. Fractional Rights and Fractional Shares.................... 28
Section 15. Rights of Action........................................... 28
Section 16. Agreement of Rights Holders................................ 29
Section 17. Rights Certificate Holder Not Deemed a Shareholder......... 29
Section 18. Concerning the Rights Agent................................ 30
Section 19. Merger or Consolidation or Change of Name of Rights Agent.. 30
Section 20. Duties of Rights Agent..................................... 31
Section 21. Change of Rights Agent..................................... 33
Section 22. Issuance of New Rights Certificates........................ 34
Section 23. Redemption and Termination................................. 34
Section 24. Exchange................................................... 37
Section 25. Notice of Certain Events................................... 38
Section 26. Notices.................................................... 39
Section 27. Supplements and Amendments................................. 40
Section 28. Successors................................................. 41
Section 29. Determinations and Actions by the Board.................... 41
Section 30. Benefits of this Agreement................................. 42
Section 31. Severability............................................... 42
Section 32. Governing Law.............................................. 42
Section 33. Counterparts............................................... 42
Section 34. Descriptive Headings....................................... 42
Exhibits
--------
A Form of Rights Certificate
B Summary of Rights Agreement
i
RIGHTS AGREEMENT
This Rights Agreement, dated as of June 1, 2006 (this Agreement"), is by
and between Synovis Life Technologies, Inc., a Minnesota corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York corporation,
as Rights Agent (the "Rights Agent").
WITNESSETH
WHEREAS, in June 1996 the Board of Directors of the Company (the "Board")
approved and adopted a Rights Agreement (the "1996 Agreement") pursuant to which
common stock purchase rights were distributed to the shareholders of the
Company;
WHEREAS, the rights issued pursuant to the 1996 Agreement will expire at
the close of business on June 11, 2006, and the 1996 Agreement will thereupon
terminate; and
WHEREAS, on June 1, 2006 (the "Rights Dividend Declaration Date"), the
Board determined to extend the protections similar to those provided by the 1996
Agreement by authorizing and declaring a dividend distribution of one new Right
for each share of common stock, par value $0.01 per share, of the Company (the
"Common Stock") outstanding at the close of business on June 11, 2006 (the
"Record Date"), to replace the rights previously issued pursuant to the 1996
Agreement, and the Board has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Sections 11,
13, or 24 hereof) for each share of Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
Distribution Date, each Right (initially, a "Right" and collectively the
"Rights") initially representing the right to purchase one-tenth of a Common
Share of the Company upon the terms and subject to the conditions hereinafter
set forth and directed the issuance of one Right for each Common Share issued
between the Record Date and the earlier of the Distribution Date or the
Expiration Date (both as hereinafter defined).
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, other than an Exempt
Person, who or which, alone or together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 20% or more of the Common
Shares then outstanding (other than as a result of a Permitted Offer (as
hereinafter defined)). Notwithstanding the foregoing, no Person shall
become an "Acquiring Person": (i) as the result of an acquisition of Common
Shares by the Company which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares
beneficially owned by such Person to 20% or more of the Common Shares then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Shares then outstanding by
reason of Common Share purchases by the Company and shall thereafter become
the Beneficial Owner of any additional Common Shares, then such Person
shall be deemed to be an "Acquiring Person"; or (ii) who beneficially owns
20% or more of the outstanding Common Shares
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but who acquired Beneficial Ownership of Common Shares without any plan or
intention to seek or affect control of the Company, if such Person promptly
enters into an irrevocable commitment promptly to divest, and thereafter
promptly divests (without exercising or retaining any power, including
voting, with respect to such shares), sufficient shares of Common Shares
(or securities convertible into, exchangeable into or exercisable for
Common Shares) so that such Person ceases to be the Beneficial Owner of 20%
or more of the outstanding shares of Common Shares; or (iii) who
beneficially owns Common Shares consisting solely of one or more (A) Common
Shares beneficially owned pursuant to the grant for exercise of an option
granted to such Person by the Company in connection with an agreement to
merge with, or acquire, the Company entered into prior to a Section
11(a)(ii) Trigger Date, (B) Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares), beneficially owned by
such Person or its Affiliates or Associates at the time of grant of such
option or (C) Common Shares (or securities convertible into, exchangeable
into or exercisable for Common Shares) acquired by Affiliates or Associates
of such Person after the time of such grant which, in the aggregate, amount
to less than 1% of the outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
(d) "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 hereof.
(e) "Agreement" shall have the meaning set forth in the preamble
clause at the beginning hereof.
(f) "Beneficial Owner"
(i) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(A) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, beneficially owns;
(B) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, 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, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
other rights, warrants or options or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (1) 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
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are accepted for purchase or exchange, (2) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (3) 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 (the "Original
Rights") or pursuant to Section 11(i) in connection with an adjustment made
with respect to any Original Rights;
(C) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right (sole or shared) 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, whether or not the Company is subject to
the Exchange Act), including, without limitation, pursuant to any
agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this Section 1(f)(i)(C) as
a result of an oral or written agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding (1)
arises solely from a revocable proxy given in response to a 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 if such provisions are not applicable by law such proxy
or solicitation is made in substantially the same manner as if such
provisions were applicable), and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report) (and if the Company is not subject to the Exchange Act,
would not be then reportable if the Company was subject to the Exchange
Act); or
(D) 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, whether or not in writing, for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in Section 1(f)(i)(C)(1) or disposing of such securities.
(ii) Notwithstanding anything in this definition to the contrary,
the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person is
deemed to own beneficially hereunder.
(g) "Board" shall have the meaning set forth in the recital clause at
the beginning of this Agreement.
(h) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the States of New York or Minnesota
are authorized or obligated by law or executive order to close.
(i) "Close of business" on any given date shall mean 5:00 p.m.
Minneapolis, Minnesota time, on such date; provided, however, that if such
date is not a Business Day
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it shall mean 5:00 p.m. Minneapolis, Minnesota time on the next succeeding
Business Day.
(j) "Committee" shall have the meaning set forth in Section 23(c).
(k) "Common Shares" when used with reference to the Company shall mean
the shares of Common Stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the
Company shall mean: (i) in the case of Persons organized in corporate form,
the shares of capital stock or units of equity security with the greatest
voting power of such Person or, if such Person is a Subsidiary of another
Person, of the Person or Persons which ultimately control or direct the
management of such first-mentioned Person, and (ii) in the case of Persons
not organized in corporate form, the units of beneficial interest which (A)
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 (B) are entitled
to exercise the greatest voting power of such Person or, in the case of a
limited partnership, shall have the power to remove the general partner or
partners.
(l) "Company" shall have the meaning set forth in the preamble clause
at the beginning of this Agreement.
(m) "Current Market Price" shall have the meaning set forth in Section
11(d).
(n) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(o) "Distribution Date" shall have the meaning set forth in Section
3(a).
(p) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(a)(iii).
(q) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(r) "Exchange Ratio" shall have the meaning set forth in Section
24(a).
(s) "Exempt Person(s)" shall mean the Company, any Subsidiary of the
Company, or any employee benefit 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.
(t) "Expiration Date" shall have the meaning set forth in Section
7(a).
(u) "Final Expiration Date" shall mean the close of business on June
10, 2016.
(v) "Offer Date" shall have the meaning set forth in Section 23(d)(i).
(w) "Original Rights" shall have the meaning set forth in Section
1(f)(i)(B)(3).
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(x) "Outside Directors" shall mean members of the Board who are not
officers of the Company or any of its Subsidiaries and who are not
Acquiring Persons or representatives, nominees, Affiliates or Associates of
Acquiring Persons.
(y) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior
to the purchase of shares under such tender or exchange offer, by at least
a majority of the Outside Directors to be adequate (taking into account all
factors that such directors deem relevant including, without limitation,
prices that could reasonably be achieved if the Company or its assets were
sold on an orderly basis designed to realize maximum value) and otherwise
in the best interests of the Company and its shareholders (other than the
Person or any Affiliate or Associate thereof on whose behalf the offer is
being made) taking into account all factors that such directors may deem
relevant.
(z) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(aa) "Principal Party" shall have the meaning set forth in Section
13(b).
(bb) "Purchase Price" shall have the meaning set forth in Section
4(a), and shall initially be as set forth in Section 7(b).
(cc) "Qualified Offer" shall mean a tender offer for all outstanding
shares of Common Stock which meets all of the following requirements:
(i) the same per share price and consideration is offered for all
shares of Common Stock in the Qualified Offer, provided that such per share
price and consideration is no less than the then Current Market Price for
shares of Common Stock;
(ii) the consideration is at least 80 percent cash (and any
non-cash portion is comprised of shares listed on a national exchange or
the Nasdaq National Market, to be adjusted to reflect any decrease in the
value of such shares prior to the consummation of the Qualified Offer) and
is to be paid upon consummation of the Qualified Offer for all tendered or
exchanged shares of Common Stock in the Qualified Offer;
(iii) on or prior to the date such offer is commenced within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, such Person making the offer:
(A) has on hand cash or cash equivalents for the full amount
necessary to consummate such offer and has irrevocably committed in writing
to the Company to utilize such cash or cash equivalents for purposes of
such offer if consummated and to set apart and maintain available such cash
or cash equivalents for such purposes until the offer is consummated or
withdrawn; or
5
(B) has all financing in the full amount necessary to
consummate such offer and has:
(1) entered into, and provided to the Company certified
copies of, definitive financing agreements (including exhibits and related
documents) for funds for such offer which, when added to the amount of cash
and cash equivalents available, committed in writing, set apart and
maintained in the same manner as described in clause (A) above, are in an
amount not less than the full amount necessary to consummate such offer,
which agreements are with one or more responsible financial institutions or
other entities having the necessary financial capacity and ability to
provide such funds, and are subject only to customary terms and conditions
(which shall in no event include conditions requiring access by such
financial institutions to non-public information to be provided by the
Company, conditions based on the accuracy of any information concerning the
Company, or conditions requiring the Company to make any representations,
warranties or covenants in connection with such financing); and
(2) provided to the Company copies of all written
materials prepared by such Person for such financial institutions in
connection with entering into such financing agreements; provided that,
"the full amount necessary to consummate such offer" in either clause (A)
or (B) above shall be an amount sufficient to pay for all shares of Common
Stock outstanding on a fully diluted basis the cash portion of the
consideration pursuant to the offer and the second-step transaction
required by clause (v) below and all related expenses;
(iv) the offering Person requests the Company to call a special
meeting of the Company's shareholders for the purpose of voting on a
resolution accepting such offer and authorizing the redemption of the
Rights, and the offer contains a written agreement of such Person to pay
(or share with any other offering Person) at least one-half of the
Company's costs of such special meeting;
(v) such offer remains open for at least 30 Business Days;
provided, however, that (x) if there is any increase in the price of such
offer, such offer must remain open for at least an additional 20 Business
Days after the last such increase, (y) such offer must remain open for at
least 20 Business Days after the date that any bona fide alternative offer
is made which, in the opinion of one or more investment banking firms
designated by the Company, provides for consideration per share in excess
of that provided for in such offer, and (z) such offer must remain open for
at least 20 Business Days after the date, if any, on which such Person
reduces the per share price offered in accordance with clause (vii)(y)
below (provided, in the case of each of clauses (x), (y) and (z) above, in
no event will such offer have been outstanding for less than 30 Business
Days); provided further, however, that such offer need not remain open, as
a result of this clause (v), beyond (1) the time which any other offer
satisfying the criteria for a Qualified Offer is then required to be kept
open under this clause (v), or (2) the scheduled expiration date, as such
date may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender or exchange offer for Common
Stock with respect to which the Board of Directors has agreed to redeem the
Rights immediately prior to acceptance for payment of Common Stock
thereunder (unless such
6
other offer is terminated prior to its expiration without any Common Stock
having been purchased thereunder);
(vi) such offer is accompanied by a written opinion, in customary
form, of a nationally recognized investment banking firm which is addressed
to the Company and the holders of Common Stock other than such Person and
states that the price to be paid to holders pursuant to the offer is fair
from a financial point of view to such holders and includes any written
presentation of such firm showing the analysis and range of values
underlying such conclusions and such written opinion and any such
presentation is updated and provided to the Company within two Business
Days prior to the date such offer is consummated;
(vii) prior to or on the date that such offer is commenced within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, such Person makes an irrevocable written commitment to the
Company and, with respect to clause (x), to its stockholders, (x) to
consummate a transaction or transactions promptly upon the completion of
such offer (and in no event later than five Business Days thereafter),
whereby all Common Stock not purchased in such offer will be acquired at
the same cash price per share paid in such offer, subject only to the
condition that the Board of Directors shall have granted any approvals
required to enable such Person to consummate such transaction or
transactions following consummation of such offer without obtaining the
vote of any other stockholder, (y) that such Person will not make any
amendment to the original offer which reduces the per share price offered
(other than a reduction to reflect any dividend declared by the Company,
other than a regular quarterly dividend, after the commencement of such
offer or any material change in the capital structure of the Company
initiated by the Company after the commencement of such offer, whether by
way of reclassification, recapitalization, reorganization, repurchase or
otherwise), changes the form of consideration offered, or reduces the
number of shares being sought or which is in any other respect materially
adverse to the Company's stockholders, and (z) that neither such Person nor
any of its Affiliates or Associates will make any offer for or purchase any
equity securities of the Company for a period of one year after the
commencement of the original offer if such original offer does not result
in the tender of at least 85% of the outstanding shares of Common Stock not
owned by such Person (including its Affiliates and Associates), unless
another tender offer by another party for all outstanding Common Stock is
commenced that (a) constitutes a Qualified Offer (in which event, any new
offer by such Person or of any Affiliates or Associates must be at a price
no less than that provided for in such original offer) or (b) is approved
by the Board of Directors of the Company (in which event, any new offer by
such Person or of any of its Affiliates or Associates must be at a price no
less than that provided for in such approved offer); and
(viii) in addition to each of the requirements set forth above,
such offer is not subject to any financing, funding or similar condition,
nor any condition relating to completion of or satisfaction with any due
diligence or similar investigation, and, subject to the foregoing,
otherwise provides for usual and customary terms and conditions.
7
(dd) "Record Date" shall have the meaning set forth in the recital
clause at the beginning of this Agreement.
(ee) "Redemption Date" shall have the meaning set forth in Section
7(a).
(ff) "Redemption Price" shall have the meaning set forth in Section
23(b).
(gg) "Resolution" shall have the meaning set forth in Section
23(d)(i).
(hh) "Rights" shall have the meaning set forth in the recital clause
at the beginning of this Agreement.
(ii) "Rights Agent" shall have the meaning set forth in the preamble
clause at the beginning of this Agreement until a successor Rights Agent
shall have become such pursuant to the applicable provisions of this
Agreement, 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 provisions of this Agreement,
"Rights Agent" shall mean and include each such Person.
(jj) "Rights Certificates" shall have the meaning set forth in Section
3(a).
(kk) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recital clause at the beginning of this Agreement.
(ll) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A), (B), or (C).
(mm) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii).
(nn) "Section 13 Event" shall mean any event described in clauses (i),
(ii) or (iii) of Section 13(a).
(oo) "Special Meeting" shall have the meaning set forth in Section
23(d)(i).
(pp) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(qq) "Stock Acquisition Date" shall mean the date of first public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(rr) "Subsidiary" shall mean, with reference to any Person, any other
Person of which at least a majority of the voting power of the voting
equity securities or equity interests is beneficially owned, directly or
indirectly, or otherwise controlled by such first mentioned Person.
8
(ss) "Substitute Consideration" shall have the meaning set forth in
Section 11(a)(iii).
(tt) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(uu) "Trading Day" shall have the meaning set forth in Section 11(d).
(vv) "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 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 appoint such additional co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the first to occur of:
(i) the close of business on the tenth Business Day after the
Stock Acquisition Date (or, if the tenth Business Day after the Stock
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 the Board, acting by a majority of the
Outside Directors, prior to such time as any Person has become an Acquiring
Person) after the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than by an Exempt Person) is first
published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act (or any comparable or
successor rule), if upon consummation thereof, such Person would be the
Beneficial Owner of 20% or more of the Common Shares then outstanding,
(the first to occur of (i) and (ii) being herein referred to as the
"Distribution Date"), (A) the Rights will be evidenced (subject to the
provisions of Section 3(b)) by the certificates for the Common Shares
registered in the names of the holders thereof (which certificates for
Common Shares shall be deemed also to be certificates for Rights) and not
by separate certificates and (B) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares (including a
transfer to the Company). As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of 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 certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
Common Share so held, subject to
9
adjustment as provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the date of this Agreement,
the Company will file this Rights Agreement, and a summary hereof, in
substantially the form attached hereto as Exhibit B, on a Current Report on
Form 8-K or other filing with the Securities and Exchange Commission. With
respect to certificates for the Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Shares and the registered holders of the Common
Shares shall also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date, the transfer
of any certificates representing Common Shares in respect of which Rights
have been issued shall also constitute the transfer of the Rights
associated with such Common Shares. Certificates issued after the Record
Date upon the transfer of Common Shares outstanding on the Record Date
shall bear the legend set forth in Section 3(c).
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Rights shall also be issued to the extent
provided in Section 22 in respect of all Common Shares which are issued
after the Distribution Date and prior to the Expiration Date. Certificates
representing Common Shares (including, without limitation, certificates
issued upon transfer or exchange of Common Shares) issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date shall also be deemed to be certificates for the associated Rights, and
shall bear the following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Synovis
Life Technologies, Inc. (the "Company") and American Stock Transfer &
Trust Company (the "Rights Agent") dated as of June 1, 2006 (the
"Rights Agreement"), and as the same may be amended from time to time,
the terms of which (including restrictions on the transfer of such
Rights) are hereby incorporated herein by reference and a copy of
which is on file at the principal executive 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 after receipt of a
written request therefor from such holder. Under certain
circumstances, as 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) and any subsequent holder of such Rights, whether
currently held by or on behalf of such Person or any subsequent
holder, may become null and void."
Until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the Common Shares represented by certificates for
Common Shares shall be
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evidenced by such certificates alone and registered holders of Common
Shares shall also be the registered holders of the associated Rights, and
the transfer of any of such certificates shall also constitute the transfer
of the Rights associated with such Common Shares, whether or not containing
the foregoing legend. In the event that the Company purchases or acquires
and cancels any Common Shares after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, any Rights
associated with such Common Shares shall be deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights associated
with the Common Shares that are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to exercise,
certification and assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange, national market system 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 Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall entitle the holders thereof to
purchase such number of Common Shares as shall be set forth therein at the
price per Common Share set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights beneficially owned by a Person reasonably
believed by at least a majority of the Outside Directors to be (i) an
Acquiring Person or any Associate or Affiliate of any such 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 (or from any
such Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or any such Associate or Affiliate) has any
continuing oral or written plan, agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which at least a
majority of the Outside Directors has determined is part of an oral or
written plan, arrangement or understanding that has as a primary purpose or
effect avoidance of Section 7(e), and any Rights Certificate issued to any
such Person pursuant Section 6 or Section 11 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,
modified as applicable to such Person:
11
"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 Sections 7(e) of this Agreement 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 President and Chief Executive Officer 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 will keep or
cause to be kept, at its office designated by the Rights Agent 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 number of Rights
evidenced on its face by each of the Rights Certificates, the date of each
of the Rights Certificates and whether each such Rights Certificate
contains a legend as set forth in Section 4(b).
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), Section
14 and Section 20(k), 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 may be transferred,
split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
Common Shares (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such
12
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 duly completed and executed 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), Section 14
and Section 20(k), countersign and deliver to each Person entitled thereto
a Rights Certificate or Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any transfer
tax or 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,
at the Company's or the Rights Agent's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make 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.
Section 7. Exercise of Rights; Purchase Price; Expiration Date.
(a) Subject to Section 7(e), 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(a)) in whole or in part, at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to exercise
and the certificate on the reverse side thereof duly completed and
executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for
the total number of Common Shares (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the first to occur of: (i) the Final Expiration
Date; (ii) if this Agreement is not ratified by holders of the greater of
(A) a majority of the voting power of the shares of Common Stock present
and entitled to vote on that item of business, or (B) a majority of the
voting power of the minimum number of shares of Common Stock entitled to
vote that would constitute a quorum for the transaction of business at the
meeting (except where the Company's Articles of Incorporation or the
Minnesota Business Corporation Act require a larger proportion or number),
as such vote is
13
determined at the Company's first annual meeting of shareholders following
June 1, 2006, immediately following such annual meeting; (iii) the time at
which such Rights expire as provided in Section 13(d); (iv) the time at
which such Rights are redeemed as provided in Section 23 (the "Redemption
Date"); or (v) the time at which such Rights are exchanged as provided in
Section 24 (the first to occur of (i), (ii), (iii) (iv) and (v) being
herein referred to as the "Expiration Date").
(b) The Purchase Price for each one-tenth of a Common Share
purchasable pursuant to the exercise of a Right shall initially be $5.00,
shall be subject to adjustment from time to time as provided in Section 11
and Section 13(a) and shall be payable in accordance with Section 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise and certificate on the
reverse side thereof duly completed and executed, accompanied by payment of
the Purchase Price for the number of Common Shares (or other securities,
cash or other assets, as the case may be) to be purchased and an amount
equal to any applicable transfer tax or charge, the Rights Agent shall,
subject to Section 14(b) and Section 20(k), thereupon promptly (i)
requisition from any transfer agent of the Common Shares (or make
available, if the Rights Agent is the transfer agent for such Common
Shares) certificates for the total number of Common Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply
with all 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, (iii) promptly after receipt of such certificates, 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) promptly 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)) may be made by cash, certified bank
check or money order payable to the order of the Company. If the Company
determines to issue other securities of the Company, pay cash and/or
distribute other assets pursuant to Section 11(a)(iii), the Company will
make all arrangements necessary so that such other securities, cash and/or
other assets are available for Distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all 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.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
that are or were beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate of any such Person, (ii) a transferee of an
Acquiring Person or (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
14
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 (or from any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or any
such Associate or Affiliate) or to any Person with whom the Acquiring
Person (or any such Associate or Affiliate) has any continuing oral or
written plan, agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which at least a majority of the
Outside Directors has determined is part of an oral or written plan,
agreement, arrangement or understanding that has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void
without any further action and any holder of such Rights shall have no
rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
are complied with, but shall have no liability to any holder of a Rights
Certificate or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of their
respective 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) duly completed and executed the
certificate following the form of assignment or election to exercise 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 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 to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall 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 in accordance with the rules and
regulations of the Securities and Exchange Commission, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares; Registration.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available for issuance upon the exercise of outstanding Rights as
many of its authorized and unissued Common Shares (and, following the
occurrence of a Triggering Event, if applicable, any Equivalent Preferred
Stock and/or other securities), which together at all times after the
Distribution Date as provided in this Agreement, including
15
pursuant to Section 11(a)(iii), will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) If the Common Shares (or other securities, if applicable) issuable
and deliverable upon the exercise of the Rights are listed or admitted for
trading on any national securities exchange or included for quotation on
any national market system, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares and other securities reserved for such issuance to be listed or
admitted for trading on such national securities exchange or included for
quotation on any such national market system upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by
the Company upon exercise of the Rights has been determined pursuant to
this Agreement, including in accordance with Section 11(a)(iii), or as soon
as is required by law following the Distribution Date, as the case may be,
a registration statement or statements under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form or forms, (ii) cause such registration statement or
statements to become effective as soon as practicable after such filing,
and (iii) cause such registration statement or statements 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 or (B) the Expiration Date. 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.
The Company may temporarily suspend, for a period of time not to exceed 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 or statements and permit it or them to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, 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 qualifications in such jurisdiction, if
any, shall have been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares (or other securities,
if applicable) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject
to payment of the Purchase Price), be duly and validly authorized and
issued and, with respect to Common Shares or other shares of capital stock,
fully paid and non-assessable.
(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 Common Shares (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 or charge that
may be payable in respect of any transfer or delivery of Rights
Certificates to a Person
16
other than, or the issuance or delivery of a number of Common Shares (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 Common Shares (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 or charge shall have been paid (any such tax or charge 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 or charge is due.
Section 10. Common Shares Record Date. Each Person in whose name any
certificate for a number of Common Shares (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 Common Shares (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 and payment of the Purchase Price (and all applicable transfer taxes
or charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the applicable transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (or other securities, as the case may be), fractional or otherwise, on,
and such certificate shall be dated, the next succeeding Business Day on which
the applicable 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
shares (or other securities, as the case may be) 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 or other
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11:
(a)
(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the outstanding Common Shares
payable in Common Shares; (B) subdivide or split the outstanding Common
Shares, (C) combine or consolidate the outstanding Common Shares into a
smaller number of shares or effect a reverse stock split of the outstanding
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, split, combination, consolidation or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of capital stock
which, if such Right had been
17
exercised immediately prior to such date and at a time when the Company's
transfer books for the Common Shares were open, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, split, combination, consolidation or reclassification. If an
event occurs that would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), 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).
(ii) Subject to Section 24 of this Agreement, in the event:
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (1) shall merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and the Common Stock of
the Company shall remain outstanding and not changed into or exchanged for
stock or other securities of any other Person or the Company or cash or any
other property, (2) shall, in one or more transactions, transfer any assets
to the Company in exchange (in whole or in part) for shares of any equity
security of the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any equity security of the
Company or any of its Subsidiaries or otherwise obtain from the Company,
with or without consideration, any additional shares of any equity security
of the Company or securities exercisable for or convertible into shares of
any equity security of the Company or any of its Subsidiaries (other than
as part of a pro rata distribution to all holders of Common Stock), (3)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one or more transactions), to, from or with, as the
case may be, the Company or any of its Subsidiaries, assets on terms and
conditions less favorable to the Company than the Company would be able to
obtain in arms' length negotiation with an unaffiliated third Person, (4)
shall engage in any transaction with the Company involving the sale,
purchase, lease, exchange, mortgage, pledge, transfer or other disposition
(in one transaction or a series of transactions), other than incidental to
the lines of business currently engaged in as of the date hereof by the
Company and such Acquiring Person, or Associate or Affiliate, of assets
having an aggregate fair market value of more than $2,000,000, (5) shall
receive any compensation from the Company or any of the Company's
Subsidiaries other than compensation for full time employment as a regular
employee at rates in accordance with the Company's (or its Subsidiaries')
past practices, or (6) shall receive the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans other than in the
ordinary course of business), advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries, or
(B) Any Person (other than an Exempt Person) shall, at any
time after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person
is a transaction set forth in Section 13(a), or
18
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries or any other transaction or
series of transactions (whether or not with or into or otherwise involving
an Acquiring Person) which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the outstanding
shares of any class of equity securities of the Company or any of its
Subsidiaries which is directly or indirectly owned by any Acquiring Person
or any Associate or Affiliate of any Acquiring Person,
then, and in each such case, promptly following the first occurrence of 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)) shall thereafter
have the right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by ten times the number of tenths of
a Common Share for which a Right is then exercisable, in accordance with
the terms of this Agreement, in lieu of the number of one-tenth Common
Shares for which such Right was exercisable immediately prior to the
occurrence of such Section 11(a)(ii) Event, such number of whole Common
Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by ten times the number of tenths of a Common Share
for which such 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 for all purposes of this Agreement) by
50% of the Current Market Price per Common Share (determined pursuant to
Section 11(d) on the date of such first occurrence (such number of whole
Common Shares, the "Adjustment Shares"); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). The Company shall not enter into any
transaction of the kind listed in this Section 11(a)(ii) if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(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 all of the
exercisable Rights in accordance with Section 11(a)(ii), 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 the Purchase
Price, (3) Common Shares and/or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred
stock of the Company with rights, privileges and other terms substantially
the same as the Common Shares (such shares of preferred stock are referred
to herein as
19
"Equivalent Preferred Stock")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing (whichever
substituted, the "Substitute Consideration"), having an aggregate value
equal to the Current Value, where such aggregate value has been determined
by at least a majority of the Outside Directors based upon the advice of an
investment banking firm selected by at least a majority of the Outside
Directors; provided, however, if the Company shall not have made adequate
provision to deliver substitute consideration pursuant to clause (B) above
within 30 days following the later of (x) the date of the 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 at least a majority of the
Outside Directors 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 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (xx) shall provide,
subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (yy) 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
give notice to the Rights Agent and either advise in writing all
shareholders of record as of that date or issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a notice to the Rights Agent and either a written
notice to all shareholders of record or a public announcement at such time
as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), (xxx) the value of the Common Shares shall be the Current
Market Price (as determined pursuant to Section 11(d)) per Common Share on
the Section 11(a)(ii) Trigger Date, and (yyy) the value of any "Equivalent
Preferred Stock" shall be deemed to have the same value as a Common Share
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 Common Shares entitling them
to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Common Shares (or securities convertible into
Common Shares) at a price per Common Share (or having a conversion price
per Common Share, if a security convertible into Common Shares) less than
the Current Market Price (as determined pursuant to Section 11(d)) per
Common 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 Common Shares outstanding on such record
date, plus the number of Common Shares which the
20
aggregate offering price of the total number of Common Shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase, at such Current Market Price,
and the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional Common
Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or
all of which may in a form other than cash, the value of such consideration
shall be as determined in good faith by at least a majority of the Outside
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Common Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustments 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 Common Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular quarterly dividend out of the earnings or retained
earnings of the Company), assets (other than a regular quarterly dividend
referred to above or a dividend payable in Common Shares, but including any
dividend payable in stock other than Common Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b)), 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)) per Common Share on such
record date, less the fair market value (as determined in good faith by at
least a majority of the Outside Directors, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed on, or of
such subscription rights or warrants applicable to, one Common Share, and
the denominator of which shall be such Current Market Price. 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) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), 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 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), 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 10 consecutive Trading Days immediately
following such date; provided,
21
however, that in the event that such Current Market Price 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, split, combination or
reclassification of such Common Shares, and prior to the expiration of the
requisite 30 Trading Day or 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, split, combination or reclassification, then,
and in each such case, the "Current Market Price" shall be properly
adjusted to take into account ex-dividend trading. The closing price for
each Trading 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
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 sale
price or, if not reported, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the Nasdaq System 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 Outside Directors. If on any such date no
market maker is making a market in the Common Shares, the "Current Market
Price" per share shall mean the fair value per share as determined in good
faith by at least a majority of the Outside Directors, 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 the principal 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 any
national securities exchange, a Business Day.
(e) Anything herein to the contrary notwithstanding, except the last
sentence of this Section 11(e), no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandths of a Common Share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
which would be required by this Section 11, but for the first sentence of
this Section 11(e), shall be made no later than the earlier of (i) three
years from the date of the transaction or event 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), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Common Shares, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and
22
on terms as nearly equivalent as practicable to the provisions with respect
to the Common 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
with respect to the Common Shares shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
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 Common Shares (calculated to the nearest ten-thousandth of a Common
Share) obtained by (i) multiplying (A) the number of Common Shares covered
by a Right immediately prior to such adjustment, by (B) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company, acting by the decision of at least a majority of the
Outside Directors, 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 Common Shares issuable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment in the number of Rights shall
be exercisable for the number of Common Shares 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 ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company 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 10 Business Days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, 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
23
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 Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares 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 of the Common Shares 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 fully paid and non-assessable Common
Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of the number of Common Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the number of Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
or securities (fractional or otherwise) 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 sole discretion a majority of the Outside
Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance wholly for
cash of any Common Shares at less than the Current Market Price per Common
Share, (iii) issuance wholly for cash of securities which by their terms
are convertible into or exchangeable for Common Shares, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Common
Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any Person (other than a
Subsidiary of the Company in a transaction that complies with Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)), 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
24
Subsidiaries in one or more transactions each of which complies with
Section 11(o)), if (A) at the time of or immediately after such
consolidation, merger, sale or transfer there are any rights, warrants or
other instruments or securities outstanding or agreements in effect that
would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (B) prior to, simultaneously with or
immediately after such consolidation, merger, sale or transfer, the
shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(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, 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, unless such action is approved by a majority of the Outside
Directors.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Shares,
a copy of such certificate, and (c) mail or make available by filing as an
exhibit to its Current Report on Form 8-K or other filing with the Securities
and Exchange Commission 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 Common Shares) in accordance with Section 26. The
Rights Agent shall be fully authorized to rely and be protected in relying on
any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly,
(i) 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)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o)) 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 Common
Shares held by existing shareholders of the Company shall be changed into
or exchanged for stock or other securities of any Person (including the
Company) or cash or any other property, or
25
(iii) 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)),
then, and in each such case, except as contemplated by Section 13(d),
proper provision shall be made so that: (A) each holder of a Right, except
as otherwise provided herein, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price multiplied by
ten times the number of tenths of a Common Share for which a Right is then
exercisable, in accordance with the terms of this Agreement, in lieu of the
number of one-tenth Common Shares for which such Right was exercisable
immediately prior to the occurrence of such Section 13 Event, such number
of whole validly authorized and issued, fully paid, non-assessable and
freely tradable Common Shares of the Principal Party (as hereinafter
defined), not 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 ten times the number of
tenths of a Common Share for which a Right was exercisable immediately
prior to the occurrence of such Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first occurrence of a Section 13
Event, multiplying a number equal to ten times the number of tenths of a
Common Share for which such 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 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 for all purposes of this
Agreement) by 50% of the Current Market Price per whole Common Share
(determined pursuant to Section 11(d) of such Principal Party on the day of
consummation of such Section 13 Event; (B) 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; (C) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) 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 Common Shares thereafter deliverable upon the exercise of the
Rights; and (E) the provisions of Section 11(a)(ii) 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 Section 13(a)(i) or (ii), the Person that is the issuer of any
securities into which 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 Section 13(a)(iii), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or
26
transactions; provided, however, that in any such case, (A) if the Common
Shares of such Person are not at such time and have not been continuously
over the preceding 12 month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; and (B) 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.
(c)
(i) The Company shall not consummate any such transaction
constituting a Section 13 Event unless the Principal Party shall have a
sufficient number of authorized 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 Section 13(a)
and (b) and further providing that, as soon as practicable after the date
of consummation of any transaction constituting a Section 13 Event, the
Principal Party will (A) prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (1) become effective as
soon as practicable after such filing and (2) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and (B) will 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.
(ii) 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 any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in
subparagraphs (i) and (ii) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to
a Permitted Offer (or a wholly owned Subsidiary of any such Person or
Persons); (ii) the price per Common Share offered in such transaction is
not less than the price per Common Share paid to all holders of Common
Shares whose shares were purchased pursuant to such Permitted Offer, and
(iii) the form of consideration offered in such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
27
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates that evidence fractional Rights. The
Company may, in lieu of such fractional Rights, pay 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 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 sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq
System or such other system then in use or; if on any such day 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 at least a majority of the Outside Directors. If on
any such day no such market maker is making a market in the Rights, the
fair value of the Rights on such date shall be as determined in good faith
by at least a majority of the Outside Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Common
Shares or other capital stock upon exercise of the Rights or to distribute
certificates that evidence fractional shares. The Company may, in lieu of
such fractional shares, 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 per
whole Common Share. For purposes of this Section 14(b), the current market
value per whole Common Share or other capital stock shall be the closing
price of one whole Common Share or other share of capital stock (as
determined in accordance with Section 11(d)) for the Trading Day
immediately prior to the date of such exercise.
(c) Every holder of a Right, by the acceptance of the Right, expressly
waives his right to receive any fractional Rights or any fractional Common
Shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
associated Common Share certificate). Any registered holder of any Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, the associated
Common Share certificate), 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 in
28
the manner provided 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 Common Shares;
(b) on or after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices 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 complying with any other requirements set forth in this
Agreement;
(c) subject to Section 6(a) and Section 7(f), 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 Common
Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificate or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e), shall be required to be
affected by any notice or knowledge to the contrary; and
(d) Notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Board and the Rights Agent shall not have any
liability to any holder of a Right or other Person as a result of the
inability of the Company or the Rights Agent 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.
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 Common Shares 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
29
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25), 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 disbursements 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 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, administration and execution of
this Agreement and the exercise and performance of its duties hereunder,
including without limitation the costs and expenses of defending against
and appealing any such claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that such
Person would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. 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.
30
(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, by all of which the Company and the holders of Rights Certificates
(or, prior to the Distribution Date, the associated Common Share certificates),
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
advice.
(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 President and Chief Executive Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and
any such certificate shall be full and complete authorization and
protection to the Rights Agent for any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall not be liable or responsible hereunder
except for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
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
31
provisions of Section 11, Section 13 or Section 24 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 delivered pursuant to Section 12 describing any
such adjustment); nor shall it be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any Common Shares will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions or direction with respect to the performance of its duties
hereunder from the President and Chief Executive Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company, and to apply to such officers for
advice, instructions or direction 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 or direction of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent or any shareholder, director, officer or employee of the
Rights Agent from acting in any other capacity for the Company or for any
other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers 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
liable or responsible for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss or damages 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 or in the exercise of its
rights or powers 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.
32
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to exercise, as the case may be, has
either not been duly completed and executed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer until it
has received instructions with respect thereto from the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Shares the existence of which the Rights Agent has received
notice from the Company, by registered or certified mail, and to the registered
holders of the Rights Certificates (or, prior to the Distribution Date, the
associated Common Share certificates) by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares, by registered or certified
mail, and to the registered holders of the Rights Certificates (or, prior to the
Distribution Date, the associated Common Share certificates) by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the registered holder of a Rights Certificate (or, prior to the Distribution
Date, the associated Common Share certificates) who shall, with such notice,
submit his Rights Certificate (or, prior to the Distribution Date, the
associated Common Share certificates) for inspection by the Company, then the
registered holder may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States, the State of Minnesota or the
State of New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of Minnesota or the State of New York) in good standing, having an office in the
State of Minnesota or the State of New York, which is authorized under such laws
to exercise corporate trust 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 $5 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for such purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Rights Certificates
(or, prior to the Distribution Date, the associated Common Share certificates).
Failure to give any notice provided for in this Section 21 or to appoint a
successor Rights Agent, 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.
33
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, but subject to
Section 7(e), the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be specified by at least a majority of the
Outside Directors to reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the Expiration Date,
the Company (a) shall, with respect to Common Shares so issued or sold pursuant
to the exercise of stock options, grants or awards outstanding as of the
Distribution Date under any benefit plan or arrangement for employees or
directors, or upon the exercise, conversion or exchange of securities issued by
the Company prior to the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by at least a majority of the Outside Directors,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance could create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of issuance thereof.
Section 23. Redemption and Termination.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to subparagraph (b) of this Section 23 or by shareholder action
pursuant to subparagraph (d) of this Section 23 and shall not be redeemed
in any other manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the Close of Business on the
tenth day following the Record Date), or (y) the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted, as determined by the Board of Directors, to reflect any
transaction of the kind described in clauses (A) through (D) of Section
11(a)(i) occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). In considering whether
to redeem the Rights, the Board of Directors of the Company may consider
the best long-term and short-term interests of the Company, including,
without limitation, the effects of the redemption of the Rights upon
employees, suppliers and customers of the Company or any Subsidiary of the
Company and communities in which offices or other establishments of the
Company or any Subsidiary of the Company are located and all other
pertinent factors. The redemption of the Rights by the Board of Directors
may be effective at such time, on such basis and with such conditions as
such Board of Directors in its sole discretion may establish. In addition
to the right of redemption reserved in the first sentence of this
subsection (b), the Board of Directors may redeem all, but not less than
all, of the then outstanding Rights at the Redemption Price after the
occurrence of a Stock Acquisition Date, but prior to the occurrence of any
transaction of the kind
34
described in Section 11(a)(ii)(A) or (C) or Section 13(a), if either (i) a
Person who is an Acquiring Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in one transaction or series
of transactions, not directly or indirectly involving the Company or any of
its Subsidiaries and which did not result in the occurrence of any
transaction of the kind described in Section 11(a)(ii)(A) or (C) or Section
13(a), as shall result in such Person thereafter being a Beneficial Owner
of 10% or less of the outstanding shares of Common Stock of the Company,
and after such transfer or other disposition there are no other Acquiring
Persons, or (ii) in connection with any transaction of the kind described
in Section 11(a)(ii)(A) or Section 13(a) in which all holders of the Common
Stock of the Company are treated the same and which shall not involve an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, any
other Person in which such Acquiring Person, Affiliate or Associate has any
interest or any other Person acting, directly or indirectly, on behalf of
or in association with such Acquiring Person, Affiliate or Associate.
Notwithstanding any other provision of this Agreement, the Rights shall not
be exercisable after the first occurrence of an event specified in Section
11(a)(ii) until such time as the Company's right of redemption hereunder
has expired.
(c) The Board shall establish a Shareholder Rights Agreement Committee
(the "Committee") that shall review this Agreement in order to consider
whether the maintenance of this Agreement continues to be in the best
interests of the Company and its shareholders. The Committee shall conduct
such review periodically when, as and in such manner as the Committee deems
appropriate, after giving due regard to all relevant circumstances;
provided, however, that the Committee shall conduct such review at least
once every three years. Following each such review, the Committee will
report its conclusions to the Board, including any recommendation in light
thereof as to whether this Agreement should be modified, terminated or the
Rights redeemed. The Committee is authorized to retain such legal counsel,
financial advisors and other advisors as the Committee deems appropriate in
order to assist the Committee in carrying out its foregoing
responsibilities under this Agreement. The Committee shall consist of
directors who are eligible to serve on the Committee in accordance with the
Company's bylaws.
(d)
(i) In the event the Company receives a Qualified Offer, the
Outside Directors of the Board of Directors of the Company shall call a
special meeting of shareholders (the "Special Meeting") for the purpose of
voting on a resolution (i) accepting such Qualified Offer, as such
Qualified Offer may be amended or revised by the offering Person from time
to time to increase the price per share to be paid to holders of shares of
Common Stock, and (ii) authorizing the redemption of all but not less than
all the then outstanding Rights at the Redemption Price pursuant to
subparagraph (d)(ii) of this Section 23 (the "Resolution"). The Special
Meeting shall be held on a date selected by the Board of Directors, which
date shall not be less than 90 or more than 120 days after the later of (A)
the date such Qualified Offer is received by the Company (the "Offer Date")
and (B) the date of any previously scheduled meeting of shareholders to be
35
held within 60 days after the Offer Date; provided, however, that if (x)
such other meeting shall have been called for the purpose of voting on a
resolution with respect to another Qualified Offer and (y) the Offer Date
is not later than 15 days after the date such other Qualified Offer was
received by the Company, then both the Resolution and such other resolution
shall be voted on at such meeting (in addition to any other matters or
resolutions to be considered at such meeting) and such meeting shall be
deemed to be the Special Meeting; provided, however, that in any 12-month
period the Company shall not be required to hold more than one Annual
Meeting and one Special Meeting; and provided further, that if the Company
shall publicly announce that the Board of Directors has determined that it
is in the best interest of shareholders to seek an alternative transaction
so as to obtain greater value for shareholders than that provided by such
Qualified Offer, then such vote shall be postponed to a meeting called by
the Board of Directors which shall occur within 90 days after the date of
such announcement. The Board of Directors shall set a date for determining
the shareholders of record entitled to notice of and to vote at the Special
Meeting in accordance with the Company's Articles of Incorporation, By-Laws
and applicable law. At the offering Person's request, the Company shall
include in any proxy soliciting material prepared by it in connection with
the Special Meeting proxy soliciting material submitted by the offering
Person; provided, however, that the offering Person, by written agreement
with the Company contained in or delivered with such request, shall have
indemnified the Company against any and all liabilities resulting from any
statements found to be defamatory, misstatements, misleading statements or
omissions contained in or omitted from the offering Person's proxy
soliciting materials and have agreed to pay the Company's incremental costs
incurred as a result of including such material in the Company's proxy
soliciting material. Notwithstanding anything to the contrary contained
this Agreement, if the Board of Directors determines that it is in the best
interests of shareholders to seek an alternative transaction so as to
obtain greater value for shareholders than that provided by any Qualified
Offer, the Company shall be entitled to include information relating to
such alternative transaction in the proxy soliciting material prepared by
it in connection with the Special Meeting.
(ii) If at the Special Meeting, the Resolution, or a resolution
with respect to another Qualified Offer, receives the affirmative vote of
holders of the greater of (A) a majority of the voting power of the shares
of Common Stock present and entitled to vote on the Resolution, or (B) a
majority of the voting power of the minimum number of shares of Common
Stock entitled to vote on the Resolution that would constitute a quorum for
the transaction of business at the meeting (except where the Company's
Articles of Incorporation or the Minnesota Business Corporation Act require
a larger proportion or number), as such vote is determined at the Special
Meeting, not giving effect to any affirmative votes cast by the offering
Person or any of its Affiliates, then all of the Rights shall be redeemed
by the Company pursuant to such shareholder action at the Redemption Price,
effective immediately prior to the consummation of the Qualified Offer
(provided that the Qualified Offer was to be consummated prior to 60 days
after the date of the Special Meeting).
36
(iii) Nothing in this subparagraph (d) shall be construed as
limiting or prohibiting the Company or any offering Person from proposing
or engaging in any acquisition, disposition or other transfer of any
securities of the Company, any merger or consolidation involving the
Company, any sale or other transfer of assets of the Company, any
liquidation, dissolution or winding-up of the Company, or any other
business combination or other transaction, or any other action by the
Company or such offering Person; provided, however, that the holders of
Rights shall have the rights set forth in this Rights Agreement with
respect to any such acquisition, disposition, transfer, merger,
consolidation, sale, liquidation, dissolution, winding-up, business
combination, transaction or action.
(e) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to subparagraph (b)
of this Section 23, or upon effectiveness of the redemption of the Rights
pursuant to subparagraph (d) of this Section 23, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price for each Right so held. Promptly after the
action of the Board of Directors 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 to the Rights
Agent and to all such holders at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase of value any Rights at any time
in any manner other than that specifically set forth in this Section 23, or
in connection with the purchase, acquisition or redemption of shares of
Common Stock prior to the Distribution Date.
(f) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Per Share Market Price of the
Common Stock as of the time of redemption) or any other form of
consideration deemed appropriate by the Board.
Section 24. Exchange.
(a) The Board, acting by at least a majority of the Outside Directors,
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 shall not
include Rights that have become void pursuant to the provisions of Section
7(e)) for Common Shares, with each Right to be exchanged for such number of
Common Shares as shall equal the result obtained by dividing (x) a number
equal to ten times the Purchase Price by (y) the Current Market Price per
Common Share (determined pursuant to Section 11(d)) (such number of shares
being hereinafter referred to as the "Exchange Ratio")). The Exchange Ratio
shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction affecting the Common Shares that occurs after a
Section 11(a)(ii) Event.
37
Notwithstanding the foregoing, the Board shall not be empowered to effect
such exchange at any time after an Acquiring Person becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to Section 24(a) 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
notify the Rights Agent and give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner provided in Section 26
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of outstanding and
exercisable Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Equivalent Preferred Stock for Common Shares
exchangeable for Rights.
(d) In the event that there shall not be sufficient Common Shares or
Equivalent Preferred Stock issued but not outstanding or authorized but
unissued and unreserved to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional Common Shares or Equivalent
Preferred Stock 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, the Company shall pay to
the registered holders of the Rights 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, as determined pursuant to the second sentence of Section 11(d), 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 stock of any class
(other than the Common Shares) to the holders of Common Shares or to make
any other distribution to the holders of Common Shares (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), (ii) to offer to the holders of Common Shares rights or
38
warrants to subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of the Common Shares (other than a
reclassification involving only the subdivision of outstanding Common
Shares), (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one 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 (x) the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(o), or (y) a merger in which the Company is the surviving
corporation and no vote of shareholders of the Company is required to
consummate the merger), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give
to each registered holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of Common Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by
Section 25(a)(i) or (ii) at least ten Business Days prior to the record
date for determining holders of Common Shares for purposes of such action,
and in the case of any such other action, at least ten Business Days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Shares, whichever shall be
the earlier.
(b) In case any Triggering Events shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to each registered
holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26, 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) or Section 13.
Section 26. Notices.
(a) Notices, communications 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 first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Synovis Life Technologies, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: President and Chief Executive Officer
with a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
Plaza VII, Suite 3400
00 Xxxxx Xxxxxxx Xxxxxx
00
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
(b) Subject to the provisions of Section 21, notices, communications
or demands 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 first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
(c) Notices, communications 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, prior to the Distribution Date, the associated
Common Share certificate) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Company maintained by
the Company, the Rights Agent or the transfer agent for the Common Shares,
as appropriate.
Section 27. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company may (acting
by at least a majority of the Outside Directors), and the Rights Agent shall, if
the Company so directs, supplement or amend any provision of this Agreement,
including without limitation to modify or amend the definition of Acquiring
Person set forth in Section 1(a) hereof and to change the Purchase Price set
forth in Section 4(a) and Section 7(b) hereof, without the approval of any
holders of certificates representing Common Shares and without the approval of
any holders of Rights or holders of certificates representing Rights. From and
after the Distribution Date and subject to the penultimate sentence of this
Section 27, the Company may (acting by at least a majority of the Outside
Directors), and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (a) to cure any ambiguity herein, (b) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, (c) to shorten or lengthen any time period hereunder, or (d)
to otherwise change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person, or an Affiliate or Associate of any such Person); provided, however,
that this Agreement may not be supplemented or amended to lengthen (i) a time
period relating to when the rights may be redeemed at such time as the Rights
are not then redeemable, or (ii) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of any such Person). 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. Notwithstanding
40
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date or
the number of Common Shares for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
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. Determinations and Actions by the Board.
(a) For all purposes of this Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common Shares
of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3d(d)(1)(i) of the General Rules and
Regulations under the Exchange Act, whether or not the Common Shares are
registered under the Exchange Act.
(b) The Board (where specifically provided for herein, acting by at
least a majority of the Outside Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board (where specifically provided for
herein, acting by at least a majority of the Outside Directors) or to the
Company (where specifically provided for herein, acting by at least a
majority of the Outside Directors), or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the
right and power to (1) interpret the provisions of this Agreement, and (2)
make all calculations and determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem
or not redeem the Rights or to amend or supplement this Agreement). All
such actions, calculations, interpretations and determinations (including
for purposes of clause (ii) below, all omissions with respect to the
foregoing) which are done or made by the Board (where specifically provided
for herein, acting by at least a majority of the Outside Directors) in good
faith shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (ii) not
subject the Board or any director to any liability to the holders of the
Rights or to any other person.
(c) Without limiting the foregoing, nothing contained herein shall be
construed to suggest or imply that the Board of Directors shall not be
entitled to reject any Qualified Offer or any other tender offer or other
acquisition proposal, or to recommend that holders of Common Stock reject
any Qualified Offer or any other tender offer or other acquisition
proposal, or to take any other action (including, without limitation, the
commencement, prosecution, defense or settlement of any litigation and the
submission of additional or alternative offers or other proposals) with
respect to any Qualified Offer or any other tender offer or other
acquisition proposal that the Board of Directors believes is necessary or
appropriate in the exercise of such fiduciary duty.
41
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, the associated Common Share certificates) 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, the
associated Common Share certificates).
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 for any purpose or under any set
of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons, and 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 or the Rights
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 at least a
majority of the Outside Directors determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the
purpose of 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 Business Day following the date of such determination by
such Outside Directors. Without limiting the foregoing, if any provisions
requiring that a determination be made by less than the entire Board (or at a
time or with the concurrence of a group of directors consisting of less than the
entire 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
Board in accordance with applicable law and the Company's Articles of
Incorporation and Bylaws.
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 Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
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 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.
42
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: SYNOVIS LIFE TECHNOLOGIES, INC.
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
43
Exhibit A
[Form of Rights Certificate]
Certificate No. R-____________ _____ Rights
NOT EXERCISABLE AFTER JUNE 10, 2016 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ADVERSE 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. THE RIGHTS SHALL NOT BE EXERCISABLE AND SHALL BE VOID SO LONG AS HELD
BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. *
----------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, and shall replace the
preceding sentence.
Exhibit A-1
SYNOVIS LIFE TECHNOLOGIES, INC.
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 as of June 11, 2006 (the "Rights Agreement"), between Synovis
Life Technologies, Inc., a Minnesota corporation (the "Company"), and American
Stock Transfer & Trust Company, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m. (Minneapolis,
Minnesota time) on June 10, 2016, at the office of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one-tenth of one fully paid
and non-assessable share of the Company's Common Stock, par value $.01 per share
(the "Common Shares"), at a purchase price (the "Purchase Price") of $5.00 per
one-tenth of a Common Share (the "Purchase Price") (equivalent to $50.00 for
each share), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly completed and
executed. The Purchase Price may be paid by cash, certified bank check or money
order payable to the order of the Company. The number of Rights evidenced by
this Rights Certificate (and the number of Common Shares which may be purchased
upon exercise thereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of the close of business on June 26, 2006,
based on the Common Shares as constituted at such date.
Capitalized terms used herein without definition shall have the meaning
given to them in the Rights Agreement.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 10, 2016 (or, if the Rights Agreement is not
ratified by holders of a majority of the shares of Common Stock voting on the
issue at the Company's first annual meeting of shareholders after June 11, 2006,
immediately following such annual meeting) unless previously redeemed by the
Company as described below. The Rights will not become exercisable in connection
with a "Qualified Offer" as defined in the Rights Agreement.
As soon as practicable after the Distribution Date, Right Certificates will
be mailed to holders of record of Common stock as of the close of business on
the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common stock issued prior to the Distribution Date
will be issued with Rights.
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 Person, (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a Person who, after such
transfer, became an Acquiring Person or an Affiliate or Associate of any such
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.
Exhibit A-2
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Common 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
Triggering Events. In certain circumstances and as described in the Rights
Agreement, cash, property or other securities may be issued by the Company upon
the exercise hereof in lieu of Common Shares.
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 the above-mentioned office of the Rights Agent and are also
available upon written request to the Company.
Subject to the provisions of the Rights Agreement, this Rights Certificate,
with or without other Rights Certificates, upon surrender at the office or
offices 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 Common Shares 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, subject to the approval of at least a majority
of the Outside Directors, at a redemption price of $.001 per Right at any time
prior to the earlier of the close of business on (i) the tenth Business Day
following the Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement) or (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, subject to the approval of
at least a majority of the Outside Directors, exchange all or part of the Rights
evidenced by this Certificate for Common Shares or shares of a series of
preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby if in lieu thereof a cash payment is 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 Common 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
Exhibit A-3
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.
Dated:
------------------------------
ATTEST: SYNOVIS LIFE TECHNOLOGIES, INC.
By:
------------------------------------- ------------------------------------
Title:
---------------------------------
Countersigned:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:
---------------------------------
Authorized Officer
Exhibit A-4
[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:
The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMP") or New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
Exhibit A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [___] is [___] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement); and
(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 subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
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.
Exhibit A-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: SYNOVIS LIFE TECHNOLOGIES, INC.
The undersigned irrevocably hereby elects to exercise _______________ Rights
represented by this Rights Certificate to purchase the Common 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 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:
The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMF') or New York Stock Exchange, Inc. Medallion Signature Program
("MSP').
Exhibit A-7
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 of any such Person (as such terms are defined pursuant
to the Rights Agreement); and
(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 of any such Person.
Dated:
------------------------------ ----------------------------------------
Signature
Signature Guaranteed:
NOTICES
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.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored
Exhibit A-8
Exhibit B
SYNOVIS LIFE TECHNOLOGIES, INC.
SUMMARY OF RIGHTS AGREEMENT
On June 1, 2006, the Board of Directors of Synovis Life Technologies, Inc.
(the "Company") declared a dividend distribution of one common stock purchase
right (a "Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share (the "Common Shares"), payable to shareholders of record at
the close of business on June 11, 2006 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company at any time following the
Distribution Date (as defined below) one-tenth of a Common Share, or a
combination of securities and assets of equivalent value, at a purchase price of
$5.00 per one-tenth Common Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement"), dated as of June 1, 2006, between the Company and American
Stock Transfer & Trust Company, as Rights Agent. The Rights Agreement is
intended to be a new rights agreement that effectively extends protections
similar (with certain modifications) to those provided by the Company's previous
Rights Agreement dated as of June 12, 1996 (the "1996 Agreement"), upon
expiration of the 1996 Agreement at the close of business on June 11, 2006.
Initially, the Rights will be evidenced, with respect to any of the Common
Share certificates outstanding as of the Record Date, by such Common Share
certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Shares and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day following 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 twenty percent (20%) or more of the outstanding Common
Shares, other than as a result of a Permitted Offer, as defined (the "Stock
Acquisition Date"); or (ii) the close of business on the tenth business day (or
such later date as the Board of Directors, acting by a majority of the Outside
Directors, may determine) following the commencement of a tender offer or
exchange offer (other than a Permitted Offer, as defined) that would result in a
person or group beneficially owning twenty percent (20%) or more of the
outstanding Common Shares. A "Permitted Offer" means a tender or exchange offer
which is for all outstanding Common Shares at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board who are Outside Directors, to be adequate
and otherwise in the best interests of the Company and its shareholders (other
than the Person or any Affiliate or Associate thereof on whose behalf the offer
is being made). "Outside Directors" are members of the Board who are not
officers of the Company or any of its Subsidiaries and who are not Acquiring
Persons or Affiliates, Associates, nominees or representatives of Acquiring
Persons.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after June 11, 2006,
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificate for Common
Exhibit B-1
Shares outstanding will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 10, 2016 (or, if the Rights Agreement is not
ratified by holders of a majority of the shares of Common Stock voting on the
issue at the Company's first annual meeting of shareholders after June 1, 2006,
immediately following such annual meeting), unless earlier redeemed or exchanged
by the Company as described below (the earliest of all such dates, the
"Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates will
be mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and thereafter, the separate Rights Certificates alone
will represent the Rights. All Common Shares issued prior to the earlier of the
Distribution Date and the Expiration Date will be issued with Rights. Common
Shares issued after the Distribution Date upon the exercise of employee stock
options, issuances under other employee stock benefit plans or the conversion of
convertible securities issued prior to the Distribution Date will be issued with
Rights.
In the event (i) that a person or group, with certain exceptions, becomes
the beneficial owner of more than twenty percent (20%) of the then outstanding
Common Shares, other than as a result of a Permitted Offer, (ii) any Acquiring
Person or Associate or Affiliate thereof merges or consolidates with or into the
Company and the Company is the surviving or continuing corporation, or engages
in one or more series of self-dealing transactions as described in Section
11(a)(ii) of the Rights Agreement; then, and in each such case, each holder of a
Right will thereafter have the right to receive, upon exercise for a purchase
price equal to ten times the Purchase Price of the Right, that number of Common
Shares (or in certain circumstances, cash, property or other securities of the
Company) having a market value equal to twenty times the Purchase Price of the
Right. The Rights, however, are not exercisable following the occurrence of any
of the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth above, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person (or certain related
persons and transferees) will be null and void. The events set forth in this
paragraph are referred to as "Section 11(a)(ii) Events."
For example, at a Purchase Price of $5.00 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 $100 worth of Common Shares
(or other consideration as noted above) for $50. If the Common Shares had a per
share value of $10 at such time, the holder of each valid Right would be
entitled to purchase ten Common Shares for $50.
In the event that, at any time following the Stock Acquisition Date, other
than pursuant to a Permitted Offer, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the surviving
corporation or the Common Shares are changed or exchanged or (ii) fifty percent
(50%) or more 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 thereafter have the right to receive, upon exercise thereof
for a
Exhibit B-2
purchase price equal to ten times the current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value equal to twenty times the Purchase
Price of the Right. The events set forth in this paragraph are referred to as
"Section 13 Events," and the Section 11(a)(ii) Events and the Section 13 Events
are collectively referred to as the "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, at the
election of a majority of the Outside Directors, the Company may exchange the
Rights (other than Rights which have become void), in whole or in part, for
Common Shares, with each Right to be exchanged for a number of Common Shares
equal to the result obtained by dividing (x) a number equal to ten times the
Purchase Price by (y) the current market price per Common Share (subject to
adjustment). In any such exchange, the Company, at its option, may substitute a
series of preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
The Purchase Price payable and the number of Common Shares issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, split,
combination, consolidation or reclassification of, the Common Shares, (ii) if
all holders of any security of the Company are granted rights, options or
warrants to subscribe for or purchase Common Shares or convertible securities at
less than the current market price of the Common Shares, or (iii) upon the
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of the
Purchase Price. The Company will not be required to issue fractional Common
Shares, and, in lieu of such fractional Common Shares, an adjustment in cash
will be made based on the market price of the Common Shares on the last trading
date prior to the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, or (ii) the Final Expiration Date, the
Company, acting by a majority of the Outside Directors, may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (payable in cash, stock or
other consideration deemed appropriate by the Board of Directors). Immediately
upon redemption of the Rights, the Rights will terminate and the only right of
the holders of the Rights will be to receive the $.001 redemption price.
However, in the event the Company receives a Qualified Offer (as defined below),
the rights may be redeemed by way of shareholder action taken at a special
meeting of shareholders called by the Board for the purpose of voting on a
resolution accepting the Qualified Offer and authorizing the redemption of the
Rights pursuant to the provisions of the Rights Agreement. Generally, the
special meeting must be held not less than 90 and more than 120 days after the
later of the date the Qualified Offer is received and the date of any previously
scheduled meeting of shareholders to be held within 60 days after the Offer
Date. Such an action by shareholders requires the affirmative vote of holders of
the greater of (A) a majority of the voting power of the shares of Common Stock
present and entitled to vote on the resolution, or (B) a majority of the voting
power of the minimum number of shares of Common Stock entitled to vote on the
resolution that would constitute a quorum for the transaction of business at the
meeting (except where the Company's
Exhibit B-3
Articles of Incorporation or the Minnesota Business Corporation Act require a
larger proportion or number), as such vote is determined at the special meeting,
not giving effect to any affirmative votes cast by the offering Person or any of
its Affiliates, and is effective immediately prior to the consummation of any
Qualified Offer to be consummated within 60 days after the special meeting.
A "Qualified Offer" is a tender offer for all outstanding shares of Common
Stock not already beneficially owned by such Person that meets the following
conditions:
- the same per share price and consideration is offered for all shares, and
the consideration offered is no less than the then current market price for
shares of Common stock, is at least eighty percent (80%) cash (and any
non-cash portion is comprised of shares listed on a national exchange or
the Nasdaq National Market), and is to be paid upon consummation of the
offer,
- on or prior to the commencement of the offer, the offer is accompanied by
written definitive financing commitments and/or the person making the offer
has on hand cash or cash equivalents, for the full amount of all financing
necessary to consummate the offer and has irrevocably committed to use such
cash for the offer and to set apart and maintain such cash until the offer
is consummated or withdrawn,
- the offer requests that the Company call a special meeting of shareholders
to accept the offer and contains a written agreement of the person making
the offer to pay at least fifty percent (50%) of the Company's costs of the
special meeting,
- the offer by its terms remains open for at least 30 business days plus 20
business days after any change in price or after any bona fide alternative
offer for a higher consideration is made,
- the offer is accompanied by a written opinion of a nationally recognized
investment banking firm, stating that the price to be paid to holders
pursuant to the offer is fair and including any written presentation of
such firm showing the range of values underlying such conclusion,
- on or before the date the offer is commenced, such Person makes an
irrevocable written commitment to the Company:
- to acquire, within 5 Business Days upon completion of the offer, all
shares of Common Stock then not beneficially owned by such Person at
the same price, and for the same consideration, per share as paid in
the offer,
- not to amend its offer to reduce the price,
- that such Person will not make another offer for the Common Stock
within one year if at least eight-five percent (85%) of the common
stock not owned by such Person has not been tendered, and
- such offer is not subject to any financing, funding or similar condition,
does not include any condition relating to completion of or satisfaction
with any due diligence or similar investigation, and otherwise provides for
usual and customary terms and conditions.
Exhibit B-4
In the determination of the fairness of any offer, the Board retains the
authority to reject, advise the shareholders to reject, or take other action in
response to any offer necessary to the exercise of its fiduciary duties.
Immediately upon action of the Board of Directors of the Company ordering
the redemption of the Rights or upon the effectiveness of a redemption of the
Rights pursuant to shareholder adoption of a resolution accepting a Qualified
Offer and authorizing the redemption of the Rights, the only existing right of a
holder of the Rights shall be to receive the redemption price for the Rights.
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 receive dividends. The creation of the Rights should not be taxable
to shareholders. Shareholders may, however, 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 stock of an
acquiring company as set forth above.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by at least a
majority of the Outside Directors of the Company because the Outside Directors
may, at their option, either (i) declare the transaction to be a "permitted
offer," or (b) at any time before the close of business on the 10th business day
following the Stock Acquisition Date, redeem the then outstanding Rights at the
redemption price.
The Rights Agreement contains a so-called "TIDE" provision, which requires
that a shareholder rights agreement committee of the Board of Directors of the
Company shall review (not less than once every three years) whether maintaining
the Rights Agreement continues to be in the best interest of the Company's
shareholders.
Any of the provisions of the Rights Agreement, including the definition of
Acquiring Person or the Purchase Price, may be amended by at least a majority of
the Outside Directors prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by at least a
majority of the Outside Directors in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen
certain time periods under the Rights Agreement. However, no amendment to adjust
the time period governing redemption can be made at such time as the Rights are
not redeemable.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. 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.
Exhibit B-5
