Exhibit 1
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UROLOGIX, INC.
and
NORWEST BANK MINNESOTA, N.A.
Rights Agent
________________
RIGHTS AGREEMENT
Dated as of January 14, 1997
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TABLE OF CONTENTS
Section Page
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1. Certain Definitions............................................................................ 1
2. Appointment of Rights Agent.................................................................... 5
3. Issue of Rights Certificates................................................................... 5
4. Form of Rights Certificates.................................................................... 6
5. Countersignature and Registration.............................................................. 7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates........................................................... 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................................. 9
8. Cancellation and Destruction of Rights Certificates............................................ 11
9. Reservation and Availability of Capital Stock.................................................. 11
10. Preferred Stock Record Date................................................................... 13
11. Adjustment of Purchase Price, Number and Kind of Stock or Number of Rights.................... 13
12. Certificate of Adjusted Purchase Price or Number of Stock..................................... 20
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.......................... 21
14. Fractional Rights and Fractional Stock........................................................ 23
15. Rights of Action.............................................................................. 24
16. Agreement of Rights Holders................................................................... 25
17. Rights Certificate Holder Not Deemed a Shareholder............................................ 25
18. Concerning the Rights Agent................................................................... 25
19. Merger or Consolidation or Change of Name of Rights Agent..................................... 26
20. Duties of Rights Agent........................................................................ 26
21. Change of Rights Agent........................................................................ 28
22. Issuance of New Rights Certificates........................................................... 29
23. Redemption and Termination.................................................................... 29
24. Exchange...................................................................................... 30
25. Notice of Certain Events...................................................................... 31
26. Notices....................................................................................... 32
27. Supplements and Amendments.................................................................... 33
28. Successors.................................................................................... 33
29. Benefits of this Agreement.................................................................... 33
30. Administration of Agreement................................................................... 34
31. Severability.................................................................................. 34
32. Governing Law................................................................................. 34
33. Counterparts.................................................................................. 34
34. Descriptive Headings.......................................................................... 34
Exhibit A: Certificate of Designation, Preferences
and Rights of Series A Junior Participating
Preferred Stock
Exhibit B: Form of Rights Certificate
Exhibit C: Summary of Shareholders' Rights Plan
RIGHTS AGREEMENT
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RIGHTS AGREEMENT, dated as of January 14, 1997 (the "Agreement"), between
Urologix, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, a Minnesota corporation (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, on January 14, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each outstanding share of the Company's Common Stock, $.01 par
value (the "Common Stock") outstanding at the close of business on January 30,
1997 (the "Record Date"), each Right representing the right to purchase one one-
hundredth of a share of Series A Junior Participating Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights") and further
authorized the issuance of one Right with respect to each share of Common Stock
that would become outstanding after the close of business on the Record Date in
accordance with the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of a majority of the
Board of Directors, shall be the Beneficial Owner (as such term is
hereinafter defined) of voting securities having fifteen percent (15%) or
more of the then voting power of the Company, but shall not include the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan; provided, however, that if a Person is the Beneficial Owner at
the close of business on the date of this Agreement of fifteen percent
(15%) or more of the voting power of the Company, such Person shall not be
deemed an Acquiring Person unless and until such Person acquires any
additional Common Stock in any manner other than pursuant to a stock
dividend, stock split, recapitalization or similar transaction that does
not affect the percentage of outstanding Common Stock beneficially owned by
such Person. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to fifteen
percent (15%) or more of the then voting power of the Company then
outstanding; provided, however, that if a Person shall
become the Beneficial Owner of fifteen percent(15%) or more of the then
voting power of the Company then outstanding by reason of shares purchased
by the Company and shall, after such share purchases by the Company, become
the Beneficial Owner of any additional Common Stock of the Company, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding
the foregoing, if a majority of the Continuing Directors then in office
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such
Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Acquisition Event" shall mean the Flip-In Event or any event
described in Section 13(a) hereof.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights at
any time prior to the occurrence of an Acquisition Event, but
thereafter including the Rights acquired from and after the
Distribution Date (as defined in Section 3(a) below) other than
pursuant to Section 3(a) below), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (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 clause
(B) if the agreement, arrangement or understanding to vote such
security: (1) arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and
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regulations of the Exchange Act, and (2) is not also then reportable
by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (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 and
other then customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company.
Notwithstanding the foregoing, a Person shall not be deemed to be
the "Beneficial Owner" of or to "beneficially own" any securities that
are issued, or proposed to be issued, to such Person pursuant to any
stock option plan or other employee compensation plan or arrangement
of the Company or any of its Subsidiaries. Furthermore, directors and
officers of the Company shall not be deemed to beneficially own each
others Common Stock solely due to their status as a director or
officer of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the States of Minnesota or New York
are authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Minneapolis, Minnesota
time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, $.01 par value, of the
Company (as such term is defined in the introductory paragraphs above) or
any other shares of capital stock of the Company into which the Common
Stock shall be reclassified or changed, except that "Common Stock" when
used with reference to any Person other than the Company shall mean the
shares of capital stock of such Person (if such Person is a corporation) of
any class or series, or units of equity interests in such Person (if such
Person is not a corporation) of any class or series, the terms of which do
not limit (as a
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fixed amount and not merely in proportional terms) the amount of dividends
or income payable or distributable on such class or series or the amount of
assets distributable on such class or series upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and do
not provide that such class or series is subject to redemption at the
option of such Person, or any shares of capital stock or units of equity
interests into which the foregoing shall be reclassified or changed;
provided, however, that if at any time there shall be more than one such
class or series of capital stock or equity interests of such Person,
"Common Stock" of such Person shall include all such classes and series
substantially in the proportion of the total number of shares or other
units of each class or series outstanding at such time.
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such person is a member of the Board, who
is not an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board prior to the
Stock Acquisition Date, and (ii) any successor of a Continuing Director,
while such successor is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate
or Associate and is recommended or elected to succeed the Continuing
Director by a majority of the Continuing Directors.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.
(l) "Person" shall mean any individual, firm, corporation, partnership
or other entity and shall include any successor (by merger or otherwise) of
such entity.
(m) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company.
(n) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(o) "Subsidiary" shall mean, with reference to any other Person, any
corporation of which a majority of any class of equity security is
beneficially owned, directly or indirectly, by such other Person.
(p) "Voting power of the Company" shall mean the collective voting
power of the Common Stock of the Company.
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Any determination required by the definitions contained in this Section 1
shall be made by the Board in their good faith judgment, which determination
shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agent and any Co-Rights Agent shall be as the
Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth (10th)
day after the Stock Acquisition Date, or (ii) the close of business on the
tenth (10th) day (or such later date as may be determined by action of the
Continuing Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement of, or first public announcement
of the intent of any Person (other than the Company, any Subsidiary of the
Company or any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), to commence, a
tender or exchange offer which would result in such person becoming an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights) (the earliest of (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall
be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, postage prepaid mail, to each record holder of the Common
Stock 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 B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of the Shareholders' Rights Plan, in
substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
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certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall
also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as such term is defined in
Section 7 hereof), the surrender for transfer of any of the certificates
for the Common Stock outstanding on the Record Date shall also constitute
the transfer of the Rights associated with the Common Stock represented by
such certificate.
(c) Certificates for the Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date, shall
be deemed also to be certificates for 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 Urologix,
Inc. and Norwest Bank Minnesota, N.A. dated as of January 14, 1997,
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
offices of Urologix, Inc.. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Urologix, Inc. will mail to the holder of this certificate a copy of
the Rights Agreement without charge promptly after receipt of a
written request therefor. Under certain circumstances, Rights issued
to, or held by, an Acquiring Person, or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and the registered holders of
Common Stock shall also be the registered holders of the associated Rights,
and the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. In the event the Company purchases or
acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which is no longer
outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to exercise and
of assignment to be printed on the reverse thereof) shall each be
substantially in the form attached hereto as Exhibit B 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
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be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of
the Record Date and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock (or Common Stock, as the
case may be) as shall be set forth therein at the price per share set forth
therein (the "Purchase Price"), but the number of such shares and the
Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, except a
transferee purchasing from or through a nationally recognized broker-dealer
where such transferee and such transferee's Associates and Affiliates do
not collectively acquire, and will not have acquired during the preceding
20 calendar days, in combination with the proposed transfer, an amount of
Common Stock equal to more than one percent (1%) of the outstanding shares
of Common Stock, and (iii) a transferee of an Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to or on behalf of holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Continuing Directors
otherwise conclude in good faith is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to
the extent feasible and reasonably identifiable as such) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of the Rights 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 Chief Executive Officer, its President or any Vice President either
manually or by facsimile signature, which shall be attested by the
Secretary or any Assistant Secretary of the
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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 offices in Minnesota or New York, New York, 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 and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing rights that have
become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of shares of
Preferred Stock as the Rights Certificate or Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up,
combined or exchanged at the office or offices of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses
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incidental thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute and
deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) 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) hereof) in whole or in part at
any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to exercise on the reverse side
thereof duly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredth of a share of Preferred Stock
(or, if applicable, such other number of shares or other securities) as to
which the Rights are exercised, at or prior to the earlier of (i) the close
of business on January 14, 2007 (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(such earlier time being herein referred to as the "Expiration Date"). Any
Person who prior to the Distribution Date becomes a record holder of shares
of Common Stock may exercise all of the rights of a registered holder of a
Rights Certificate with respect to the Rights associated with such shares
of Common Stock in accordance with and subject to the provisions of this
Agreement, including the provisions of Section 7(e) hereof, as of the date
such Person becomes a record holder of shares of Common Stock.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be One
Hundred Dollars ($100), and shall be subject to adjustment from time to
time as provided in Section 11 hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the number of shares of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company, in
its sole discretion, shall have elected to deposit the shares of Preferred
Stock issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredth of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company will direct the
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depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by
certified check, cashier's check, bank draft or money order payable to the
order of the Company, except that if so provided by the Board, the payment
of the Purchase Price following the Flip-In Event and until the first
occurrence of an event described in Section 13 may be made wholly or in
part by delivery of a certificate or certificates (with appropriate stock
powers executed in blank attached thereto) evidencing a number of shares of
Common Stock of the Company equal to the then Purchase Price divided by the
closing price (as determined pursuant to Section 11(d) hereof) per share of
Common Stock on the Trading Day immediately preceding the date of such
exercise. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(a)(iii) hereof, the Company will make all
arrangements necessary so that such other securities, cash, and/or property
are available for distribution by the Rights Agent, if and when
appropriate. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented by
such Rights Certificate no longer include the rights provided by Section
11(a)(ii) of the Rights Agreement and if less than all the Rights
represented by such Rights Certificate were so exercised, the Rights Agent
shall indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall
exercise (except pursuant to Section 11(a)(ii)) less than all the Rights
evidenced thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Rights Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of a Flip-In Event, any Rights beneficially owned
by (a) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (b) except as provided below or in Section 4(b), a transferee of an
Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, and (c) except as
provided below, a transferee of an Acquiring Person (or 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
(i) a transfer (whether or not for consideration) from the Acquiring Person
to or on behalf of holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any
10
continuing agreement, arrangement or understanding regarding the
transferred Rights or (ii) a transfer which the Continuing Directors
otherwise conclude in good faith is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of this
Section 7(e), shall become null and void without any further action, and
any holder of such Rights shall thereupon have no right to exercise such
Rights under any provision of this Agreement. A majority of the Continuing
Directors may in appropriate circumstances waive application of this
Section 7(e) and the requirements of Section 4(b) to any transfer by an
Acquiring Person in connection with a transfer or series of transfers which
cause an Acquiring Person to become the Beneficial Owner of voting
securities having less than fifteen percent (15%) of the voting power of
the Company. The Company shall use all reasonable efforts to insure that
the provisions of this Section 7(e) hereof are complied with, but shall
have no liability to any holder of Rights for the inability 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 of any Rights Certificate
upon the occurrence of any purported exercise as set forth in this Section
7 unless the certificate contained in the appropriate form of election to
purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise shall have been completed and signed by the
registered holder thereof and the Company shall have been provided with
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of such Rights Certificate 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 any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall 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 canceled Rights Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred
Stock (and, following the occurrence of an Acquisition Event, Common Stock
and/or other securities) or any authorized and issued shares of Preferred
Stock (and following the occurrence of an Acquisition Event, Common Stock
and/or other securities) held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of an Acquisition Event,
Common Stock and/or other securities) that, except as provided in Section
11(a)(iii) and
11
subject to Section 7(e) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of an Acquisition Event, Common Stock and/or other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the Distribution Date, a registration statement under
the Securities Act of 1933 (the "Act"), with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the date of the expiration of the Rights.
The Company will also take such action as may be appropriate under the Blue
Sky laws of the various states. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days, the exercisability of the
Rights in order to prepare and file any required registration statement.
Upon any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and,
following the occurrence of an Acquisition Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares or securities.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of the
shares of Preferred Stock (or Common Stock and/or other securities, as the
case may be) in respect of a name other than that of, the registered holder
of the Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of
12
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for shares of Preferred Stock (or Common Stock, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Preferred Stock (or Common Stock,
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) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock, as the case
may be) transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock, as the case may be) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to shares 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 Stock or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and in Section 7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number
and kind of shares of Preferred Stock or capital stock, as the case may be,
which, if such Right had been exercised immediately prior to such date and
at a time when the Preferred Stock transfer books of the Company were open,
he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right.
If an
13
event occurs which would require an adjustment under both 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, at the close of business
on the tenth (10th) day after the Stock Acquisition Date (the "Flip-In
Event"), proper provision shall be made so that each holder of a Right,
except as provided below and in Section 7(e) hereof, shall thereafter have
a right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of shares of
Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable and dividing that
product by (y) 50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date on which the
first of the events listed above in this subparagraph (ii) occurs. In the
event that any Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if a majority of the Continuing
Directors then in office determine that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect
to issue or pay, upon the exercise of the Rights, cash, property, shares of
Common Stock, other securities or any combination thereof having an
aggregate value equal to the value of the shares of Common Stock which
otherwise would have been issuable pursuant to Section 11(a)(ii), which
value shall be determined by a nationally recognized investment banking
firm selected by a majority of Continuing Directors then in office. For
purposes of the preceding sentence, the value of any preferred stock which
a majority of the Continuing Directors determines to be a "common stock
equivalent" shall be deemed to have the same value as the Common Stock. Any
such election by the Continuing Directors must be made and publicly
announced within 60 days of the Flip-In Event. Following the occurrence of
the Flip-In Event, a majority of the Continuing Directors then in office
may suspend the exercisability of the Rights for a period of up to 60 days
following the occurrence of such Flip-In Event to the extent that the
Continuing Directors have not determined whether to exercise their rights
of election under this paragraph (a)(iii). In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
14
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
(45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of
Preferred Stock ("equivalent preferred stock")) or securities convertible
into Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock
or equivalent preferred stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock 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 shares of Preferred Stock outstanding on such record date,
plus the number of additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right.
In case such subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent. Stock of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) 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) hereof) per one one-
hundredth of a share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in
15
a statement filed with the Rights Agent) of the portion of the cash, assets
or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per one one-hundredth of a share of
Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to
be the Purchase Price which would have been in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current market price per share of
the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common
Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of
the thirty (30) Trading Day period after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange,
the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date the shares of Common Stock 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 Stock selected by the Board. If on any such date no market
maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be
used. The term "Trading Day" shall mean a day on
16
which the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the Board (or if there
are Continuing Directors then in office, a majority of the Continuing
Directors then in office), whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the
same manner as set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence thereof). If the
current market price per share of Preferred Stock cannot be determined
in the manner provided above, the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
100 times the current market price per share of Common Stock, as
appropriately adjusted for stock splits, stock dividends or similar
transactions after the date hereof. If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the Board (or if there are Continuing
Directors then in office, a majority of the Continuing Directors then
in office), whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7,
17
9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of one one-hundredth of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-hundredth of a share covered by the Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-
hundredth of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one 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 ten (10) 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 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights
to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the
18
Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredth of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share 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 stated or par value, if any, of the
shares of Preferred Stock 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 shares of Preferred Stock, Common Stock or other
securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their sole discretion a majority of the Continuing
Directors then in office shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the current
market price, (iii) issuance wholly for cash of shares of Preferred Stock
or securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, (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 Preferred Stock 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, (ii) merge with or into,
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer),
in one or more 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 if at the time of or immediately
after
19
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreement in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 23 hereof, take (or
permit any Subsidiary to take) any action the purpose or effect of which is
to diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement
and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock in a reclassification of the outstanding Common Stock,
the number of Rights associated with each share of Common Stock shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) The exercise of Rights under Section 11(a)(ii) shall only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under
this Rights Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Stock.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
20
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, (x) the Company shall consolidate with, or merge with and
into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person 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 shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
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), then, and in each such case, proper provision shall be
made so that: (i) each holder of a Right, shall thereafter have the right
to receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable
shares of Common Stock of the Principal Party (as hereinafter defined),
free and clear of liens, rights of call or first refusal, encumbrances or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the then number of one one-
hundredth of a share of Preferred Stock for which a Right is then
exercisable (without giving effect to the occurrence, if any, of any
transaction described in Section 11(a)(ii) hereof) and (2) dividing that
product by 50% of the current market price (determined pursuant to Section
11(d)(i) hereof) per share of the Common Stock of such Principal Party on
the date of consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof
shall apply to such Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) 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 possible, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
21
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stocks 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 Stock having
the greatest aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules
set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration
on Form 10 under the Exchange Act.
The Company shall not enter into any transaction of the kind referred to in
this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities
22
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. The rights under this Section 13 shall be in
addition to the rights to exercise Rights and adjustments under Section
11(a)(ii) and shall survive any exercise thereof.
Section 14. Fractional Rights and Fractional Stock.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof,
or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes of this
Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading, or if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted 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 NASDAQ or such other system then in use or,
if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock). Fractions of shares of Preferred
Stock in integral multiples of one one-hundredth of a share of Preferred
Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that
the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners
of the
23
shares of Preferred Stock represented by such depositary receipts. In lieu
of fractional shares of Preferred Stock that are not integral multiples of
one one-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one one-hundredth of a share of Preferred
Stock. For purposes of this Section 14(b), the current market value of one
one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing sale price of a share of Preferred Stock (as determined
pursuant to of Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of an Acquisition Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one (1) share of
Common Stock. For purposes of this Section 14(c), the current market value
of one (1) share of Common Stock shall be the closing sale price of a share
of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional 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, excepting the rights of action given to the Rights Agreement under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
24
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 Stock;
(b) 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
(c) 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 Stock 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
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and 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 and administration of this
Agreement, including the costs and expenses of defending against any claim
of liability arising therefrom, directly or indirectly.
25
(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 Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete
26
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(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 Chief Executive Officer, the President or any
Vice President, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11 or 13 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by Right Certifications
after actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such 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.
27
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chief Executive Officer, the President or any Vice President, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(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 from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, or omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, or omission, 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 if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights
28
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of the States of Minnesota or 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 States of Minnesota or New York), in good standing, having a
principal office in the States of Minnesota or 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
$50,000,000 or (b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provision of this Agreement. In addition, the Company may,
if deemed necessary or appropriate by the Board, issue Rights Certificates in
connection with the sale of shares of Common Stock following the Distribution
Date.
Section 23. Redemption and Termination.
(a) (i) The Board may, at its option, at any time prior to the
close of business on the earlier of (i) the Flip-In Event, or (ii) the
Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board may be made effective at such
time, on such basis and with such conditions as the Board in its sole
discretion may establish.
(ii) In addition, a majority of the Continuing Directors may
redeem all but not less than all of the then outstanding Rights at the
Redemption Price following the occurrence of a Stock Acquisition Date
but prior to any event described in Section 13(a) either (x) if each
of the following shall have occurred and remain in
29
effect: (1) a Person who is an Acquiring Person shall have transferred
or otherwise disposed of a number of shares of Common Stock in a
manner satisfactory to the Continuing Directors such that such Person
is thereafter a Beneficial Owner of voting securities having less than
fifteen percent (15%) of the voting power of the Company, and (2)
there is no other Person, immediately following the occurrence of the
event described in clause (1), who is an Acquiring Person, or (y) in
connection with any transaction not involving an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price. In the case of a redemption permitted only under Section 23(a)(ii),
evidence of which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right to receive
the Redemption Price only after ten (10) business days following the giving
of notice of such redemption to the holders of such Rights. Within ten (10)
days after the action of the Board of Directors or the Continuing
Directors, as the case may be, ordering any such 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.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the occurrence of
an Acquisition Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the
Board shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner
of fifty (50%) or more of the voting power of the Company.
30
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give 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 herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as
such term is defined in Section 11(b) hereof) for some or all of the Common
Stock exchangeable for Rights, at the initial rate of one one-hundredth of
a share of Preferred Stock (or equivalent preferred stock) for each share
of Common Stock, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Stock pursuant to the terms thereof, so that
the fraction of a share of Preferred Stock delivered in lieu of each share
of Common Stock shall have the same voting rights as one share of Common
Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company shall take all such action as may be
necessary to authorize additional Common Stock or Preferred Stock for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph
(e), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
31
Section 25. Notice of Certain Events. In case the Company shall propose,
at any time after the Distribution Date, (a) to pay any dividend payable in
stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), or (b) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (d) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this Agreement
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Urologix, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights
32
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:
Norwest Bank Minnesota, N.A.
000 X. Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Board and the Rights Agent
shall from time to time, if the Board so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) prior to the Distribution Date, to change or supplement any of the
provisions hereunder which the Board may deem necessary or desirable or (iv)
following the Distribution Date, to change or supplement any of the provisions
hereunder in any manner which the Board 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 an
Acquiring Person); provided, however, that this Agreement shall not be
supplemented or amended in any way following the Distribution Date unless such
amendment is approved by a majority of the Continuing Directors whose
determination shall be final. 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 unless the Rights Agent shall have
determined in good faith that such supplement or amendment would adversely
affect its interests under this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
33
Section 30. Administration of Agreement. The Board (or, as provided for
herein, the Continuing Directors) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or the Company or as may be necessary or advisable in the
administration of this Agreement, including without limitation the right and
power to interpret the Agreement and to make all determinations deemed necessary
or advisable for the administration of this Agreement. All such acts,
interpretations and determinations done or made by the Board in good faith shall
be final, conclusive and binding on the Company, the Rights Agent and the
holders of the Rights. Accordingly, the Board and the Continuing Directors (as
the case may be) shall not be liable to the holders of Rights Certificates or
any other party for any determination made, action taken, or action omitted to
be taken pursuant to the terms of this Agreement, if such determination, action
or omitted action was made or taken in good faith.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, 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 several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the day and year first above written.
UROLOGIX, INC.
Attest:
By_______________________ By____________________________
Its Secretary Its Chief Executive Officer
NORWEST BANK MINNESOTA, N.A.
Attest:
By_______________________ By____________________________
Its__________________ Its_________________________
35
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
UROLOGIX, INC.
Pursuant to Section 302.401 of the Minnesota
Business Corporation Law
We, Xxxx X.Xxxxx, President, and Xxxxxx X. Xxxxxxx, Xx., Secretary, of
Urologix, Inc., a corporation organized and existing under the Minnesota
Business Corporation Act, in accordance with the provisions of Section 302A.401
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the said Corporation, the said Board of Directors
on January 14, 1997 adopted the following resolution creating a series of Two
Hundred Fifty Thousand (250,000) shares of preferred stock designated as Series
A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Articles of
Incorporation, a series of preferred stock of the Corporation be, and it hereby
is, created, and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," $.01 par value,
and the number of shares constituting such series shall be 250,000. Such number
of shares may be increased or decreased by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of preferred stock now or hereafter ranking prior and superior to
the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Junior Participating Preferred Stock, in preference to the holders
of shares of Common Stock, $.01 par value (the "Common Stock"), of the
Corporation and any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per whole share
(rounded to the nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions, other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision (by stock split
or otherwise) or combination (by reverse stock split or otherwise) or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further that if at any time after January
30, 1997 the Corporation shall issue any shares of its capital stock in a
reclassification or change of the outstanding shares of Common Stock (including
any such reclassification or change in connection with a merger in which the
Corporation is the surviving corporation), then in such event the amount to
which holders of Series A Junior Participating Preferred Stock are entitled
shall be appropriately adjusted to reflect such reclassification or change.
(B) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) The holders of shares of Series A Junior Participating Preferred Stock
shall not be entitled to receive any dividends or other distributions except as
provided herein.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
2
(A) Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to one hundred (100) votes, subject to adjustment in
the manner set forth in Section 2(A), on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote.
(B) Except as otherwise provided herein or by applicable law, the holders
of shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein or by applicable law, holders of Series A
Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a
3
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall, upon their cancellation, become authorized but unissued
shares of preferred stock and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Liquidation Preference"). Following the payment of the full
amount of the Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Liquidation Preference by (ii) 100 (as appropriately adjusted
as set forth in subparagraph C below to reflect such events as stock splits,
stock dividends and recapitalization with respect to the Common Stock) (such
number in clause (ii) being herein referred to as the "Adjustment Number").
Following the payment of the full amount of the Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A Junior
Preferred Stock and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall
proportionately share in the remaining assets in the ratio of the Adjustment
Number (per share of Preferred Stock) to 1 (per share of Common Stock).
(B) In the event there are not sufficient assets available to permit
payment in full of the Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the
Series A Junior Participating Preferred Stock, then such remaining
4
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger etc. In case the Corporation shall enter
into any consolidation, merger combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's preferred stock which
may hereafter be authorized as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of two-thirds (2/3) or more of the outstanding shares of Series A
Junior Participating Preferred Stock, voting separately as a class.
5
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in liquidating distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ____ day of
January, 1997.
Attest:
_______________________ ______________________________
Xxxxxx X. Xxxxxxx, Xx., Xxxx X.Xxxxx,
Secretary President
6
Exhibit B
[Form of Rights Certificate]
Certificate No. R-
Rights
NOT EXERCISABLE AFTER January 14, 2007, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS 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 RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]/1/
-----------------------
/1/The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
Rights Certificate
Urologix, Inc.
This certifies that_______________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of January 14, 1997 (the "Rights Agreement"), between
Urologix, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, N.A. (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 January 14, 2007 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of One Hundred Dollars ($100) per one one-
hundredth of a share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Exercise duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of January 14, 1997, based on the Preferred Stock as constituted at such date.
If the Rights evidenced by this Rights Certificate are beneficially owned
by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person or Associate or Affiliate of such Acquiring Person
except as provided in Section 4(b) of the Rights Agreement, or (iii) under
certain circumstances, a transferee of persons who became an Acquiring Person or
Affiliate or Associate of such Acquiring Person following such transfer, such
Rights shall become null and void upon the occurrence of a Flip-In Event
described in Section 11(a)(ii) of the Rights Agreement and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock 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.
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 certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, 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 shares of Preferred Stock 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 (other than
pursuant to Section 11(a)(ii) of the Rights Agreement) 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. If this
Rights Certificate shall be exercised in whole or in part pursuant to Section
11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this
Rights Certificate duly marked to indicate that such exercise has occurred as
set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
2
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: UROLOGIX, INC.
_______________________ By_____________________________ Secretary
Title:
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By_____________________
Authorized Signature
3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto _____________________
______________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
or
[ ] 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 an Acquiring Person (as such
terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] 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
an Acquiring Person.
Dated: _________________
_______________________________
Signature
Signature Medallion Guaranteed:
NOTICE
------
The signature to the foregoing Assignment 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.
FORM OF ELECTION TO EXERCISE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: UROLOGIX, INC.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
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:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please insert social security
or other identifying number)
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such person requests that the Rights
Certificate be registered in the name of and delivered to: (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please insert social security
or other identifying number)
The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
or
[ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] 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
an Acquiring Person.
Dated: _________________
________________________________
Signature
Signature Medallion Guaranteed:
NOTICE
------
The signature to the foregoing Election to Exercise 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 C
SUMMARY OF SHAREHOLDER RIGHTS PLAN
On January 14, 1997 the Board of Directors of Urologix, Inc. (the
"Company") adopted a shareholder rights plan by declaring a dividend of one
Right for each outstanding share of the Company's Common Stock, $.01 par value
(the "Common Stock"), to the Company's shareholders of record at the close of
business on January 30, 1997 (the "Record Date"). Except as set forth below,
each Right entitles the registered holder to purchase from the Company one one-
hundredth (1/100) of a share of Series A Junior Participating Preferred Stock,
$.01 par value (the "Preferred Stock"), at a price of $100 per one one-hundredth
of a share (the "Purchase Price"). The terms of the Rights are set forth in a
Rights Agreement dated as of January 14, 1997 (the "Rights Agreement") between
the Company and Norwest Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten days
following (i) a public announcement that, without the prior consent of the Board
of Directors, a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a public
announcement of an intention to make) a tender offer or exchange offer which
would result in any person or group and related persons having beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the earlier of such dates referred to in (i) and (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with Common Stock certificates. From as soon
as practicable after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 14, 2007, unless earlier redeemed by the Company as
described below.
In the event that any person becomes the beneficial owner of 15% or more of
the voting power of the Company, ten (10) days thereafter (the "Flip-In Event")
each holder of a Right will thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price of the Right, Common Stock (or, in
certain circumstances, a combination of cash, other property, Common Stock or
other securities) which has a value of two times the Purchase Price of the Right
(such right being called the "Flip-In Right"). In the event that the Company is
acquired in a merger or other business combination transaction where the Company
is not the surviving corporation or in the event that 50% or more of its assets
or earning power is sold, proper provision shall be made so that each holder of
a Right will thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price of the Right, common stock of the acquiring
entity which has a value of two times the Purchase Price of the Right (such
right being called the "Flip-Over Right"). The holder of a Right will continue
to have the Flip-Over Right whether or not such holder exercises the Flip-In
Right. Upon the occurrence of the Flip-In Event, any Rights that are or were at
any time owned by an Acquiring Person shall become null and void insofar as they
relate to the Flip-In Right.
For example, at a Purchase Price of $100 per Right, if any person becomes
the beneficial owner of 15% or more of the voting power of the Company, ten (10)
days thereafter each Right other than a Right owned by such 15% beneficial owner
would entitle its holder to purchase $200 worth of the Company's Common Stock
(or other consideration, as noted above) for $100. Assuming that the Common
Stock had a per share value of $16 at such time, the holder of each Right would
effectively be entitled to purchase 12.5 shares of Common Stock for $100.
Similarly, assuming, following the Stock Acquisition Date, the occurrence
of a business combination with another entity in which the Company's Common
Stock is converted or exchanged, or a sale of 50% or more of the Company's
assets or earning power, each Right would entitle its holder to purchase $200
worth of the acquiring entity's stock for $100.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock or convertible securities at less
than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the voting power of
the Company and prior to the acquisition by such person or group of 50% or more
of the voting power of the Company, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-hundredth of a share of Preferred Stock (or of a share of a
class or
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series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth day after the
Stock Acquisition Date, or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"), which redemption shall be effective at such time as the
Board of Directors shall establish. Additionally, the Continuing Directors may,
following the Stock Acquisition Date, redeem the then outstanding Rights in
whole, but not in part, at the Redemption Price provided that either (a) the
Acquiring Person reduces his beneficial ownership to less than 15% of the voting
power of the Company in a manner which is satisfactory to the Continuing
Directors and there are no other Acquiring Persons, or (b) such redemption is
incidental to a merger or other business combination transaction or series of
transactions involving the Company but not involving an Acquiring Person or any
person who was an Acquiring Person. The redemption of Rights described in the
preceding sentence shall be effective only after ten (10) business days prior
notice. Upon the effective date of the redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a preferential quarterly
dividend in an amount equal to 100 times the dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock will
receive a preferred liquidation payment of $100 per whole share of Preferred
Stock. Each whole share of Preferred Stock will have 100 votes, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the Preferred Stock as to
dividends and liquidations, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of Preferred
Stock in integral multiples of one one-hundredth of a share of Preferred Stock
will be issued unless the Company elects to distribute depositary receipts in
lieu of such fractional shares. In lieu of fractional shares other than
fractions that are multiples of one one-hundredth of a share, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
Until a Right is exercised, it will not entitle the holder to any rights as
a shareholder of the Company (other than those as an existing shareholder),
including, without limitation, the right to vote or to receive dividends.
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The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
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