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As filed with the Securities and Exchange Commission on January 14, 1999
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U.S. Securities and Exchange Commission
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO
SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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COLORADO MEDTECH, INC.
(Name of Registrant in its charter)
Colorado 84-0731006
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(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6175 Longbow Drive, Boulder, Colorado 80301
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(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. / /
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. / /
If this Form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. / /
If this Form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. /X/
Securities Act registration statement file number to which this Form
relates......N/A..........................(if applicable)
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Preferred Stock Purchase Rights
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(Title of class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On December 23, 1998, the Board of Directors of Colorado MEDtech, Inc.
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of the Company's common stock, no par
value, (the "Common Stock"). The Rights were issued pursuant to a Rights
Agreement dated as of January 14, 1999 (the "Rights Agreement") between the
Company and American Securities Transfer and Trust, Inc., as Rights Agent
(the "Rights Agent"). The dividend is payable on January 14, 1999 to
shareholders of record on December 23, 1998 (the "Record Date"). The
following summary does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement and exhibits thereto, which is
incorporated herein by reference, including the definition of certain terms
contained therein.
TERMS OF THE RIGHT
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of newly authorized Series A Junior Participating
Preferred Stock, no par value, of the Company (the "Preferred Stock") at a price
of $55.00 per one one-hundredth of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment as described in the Rights Agreement. In
addition, upon the occurrence of certain takeover events and a Distribution Date
(as defined below), the holder of each Right will be entitled to purchase from
the Company a number of shares of common stock in the Company ("Common Stock")
which at the time of exercise has a market value of two times the Purchase
Price.
ISSUANCE OF RIGHTS
The Rights will be evidenced by Common Stock certificates until the earlier
to occur of
(i) 10 days following a public announcement or awareness by the Board of
Directors that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock, other than pursuant to a Permitted Offer (as
defined below); or
(ii) 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding shares of Common Stock, other than
pursuant to a Permitted Offer (the earlier of such dates being called the
"Distribution Date").
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A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding shares of Common Stock of the Company at a price and on terms
determined by the Board of Directors of the Company, after receiving advice from
one or more investment banking firms, to be (i) fair to shareholders (taking
into account all factors which the Board of Directors deems relevant) and (ii)
otherwise in the best interests of the Company and its shareholders and which
the Board of Directors determines to recommend to the shareholders of the
Company.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. 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 issuances of 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 shares of Common Stock
outstanding as of the Record Date, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
EXERCISE DATE
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 14, 2009 (the "Final Expiration Date") unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
CERTAIN ADJUSTMENTS
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 certain adjustments from time to time to prevent dilution, for example, in
the event of a stock dividend on or a subdivision, combination or
reclassification of, the Preferred Stock. 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.
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
No fraction of a share of Preferred Stock (other than fractions in integral
multiples of one
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one-hundredth of a share) will be issued and, in lieu thereof, an adjustment in
cash will be made based on the closing price on the last trading date prior to
the date of exercise.
RIGHTS OF PREFERRED STOCK
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holder of shares of Preferred Stock
will be entitled to a minimum preferential liquidation payment of $100.00 per
share but will entitled to an aggregate payment of 100 times the payment made
per share of Common Stock. Each share of Preferred Stock will have 100 votes,
voting together with the shares of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock. These rights are subject to
adjustment in the event of a stock dividend on the shares of Common Stock or a
subdivision, combination or consolidation of the shares of Common Stock.
FLIP-IN RIGHT
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will have the right to receive upon exercise of a Right at the then current
Purchase Price, that number of shares of Common Stock (or, in lieu of Common
Stock, such number or fraction of shares of Preferred Stock equivalent in value
to such number of shares of Common Stock) having a market value of two times the
Purchase Price.
FLIP OVER RIGHT
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, each holder of
a Right (other than Rights beneficially owned by an Acquiring Person which will
have become void) will have the right to receive, upon the exercise of the Right
at the then current Purchase Price, that number of shares of common stock of the
person with whom the Company has engaged in the foregoing transaction having at
the time of such transaction a market value of two times the Purchase Price.
EXCHANGE RIGHT
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock or the occurrence of an event described in the prior
paragraph, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by an Acquired Person, which will have become void), in whole
or in part, at an exchange ratio of one share of Common Stock per Right (subject
to adjustment).
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REDEMPTION
At any time prior to the close of business on the day 10 days after an
Acquiring Person becomes such, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.0001 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
AMENDMENT
For so long as no person has become an Acquiring Person, the Company may
amend the Rights in any manner. After a person has become an Acquiring Person,
the Company may amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
ITEM 2. EXHIBITS
2.1 Rights Agreement, dated as of January 14, 1999, between the Company
and American Securities Transfer & Trust, Inc., which includes the
form of Articles of Amendment as Exhibit A thereto, the form of
Rights Certificate as Exhibit B thereto and the form of Summary of
Rights to Purchase Preferred Shares as Exhibit C thereto.
2.2 Articles of Incorporation of the Company, as amended (subsequently
amended by the Articles of Amendment in Exhibit 2.1 above). (A)
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(A) Incorporated by reference from the Company's Current Report on Form 8-K
dated May 14, 1993.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
COLORADO MEDTECH, INC.
/s/ Bruce L. Arfmann
Bruce L. Arfmann
Senior Vice President and Chief Financial Officer
Dated: January 14, 1999
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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2.1 Rights Agreement, dated as of January 14, 1999, between the Company
and American Securities Transfer & Trust, Inc., which includes the
form of Articles of Amendment as Exhibit A thereto, the form of
Rights Certificate as Exhibit B thereto and the form of Summary of
Rights to Purchase Preferred Shares as Exhibit C thereto.
2.2 Articles of Incorporation of the Company, as amended (subsequently
amended by the Articles of Amendment in Exhibit 2.1 above).(A)
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(A) Incorporated by reference from the Company's Current Report on Form 8-K
dated May 14, 1993.
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RIGHTS AGREEMENT
COLORADO MEDTECH, INC.
AND
AMERICAN SECURITIES TRANSFER & TRUST, INC.,
AS RIGHTS AGENT
DATED AS OF JANUARY 14, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.. . . . . . . . . . . . . . . . . . 4
SECTION 3. ISSUE OF RIGHT CERTIFICATES.. . . . . . . . . . . . . . . . . . 4
SECTION 4. FORM OF RIGHT CERTIFICATES. . . . . . . . . . . . . . . . . . . 6
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.. . . . . . . . . . . . . . . 6
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.. 7
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. . . . . . . 9
SECTION 9. AVAILABILITY OF PREFERRED SHARES. . . . . . . . . . . . . . . . 9
SECTION 10. PREFERRED SHARES RECORD DATE. . . . . . . . . . . . . . . . . .10
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES AND NUMBER OF
RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
<PAGE>
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES. . .17
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNINGS
POWER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.. . . . . . . . . . . .21
SECTION 15. RIGHTS OF ACTION. . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 16. AGREEMENT OF RIGHT HOLDERS. . . . . . . . . . . . . . . . . . .22
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. . . . . .23
SECTION 18. CONCERNING THE RIGHTS AGENT.. . . . . . . . . . . . . . . . . .23
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.. . .24
SECTION 20. DUTIES OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . .24
SECTION 21. CHANGE OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . .26
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. . . . . . . . . . . . . . .27
SECTION 23. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 24. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 25. NOTICE OF CERTAIN EVENTS. . . . . . . . . . . . . . . . . . . .29
SECTION 26. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 27. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . .31
SECTION 28. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 29. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . .31
SECTION 30. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 31. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 32. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . .32
<PAGE>
SECTION 33. DESCRIPTIVE HEADINGS. . . . . . . . . . . . . . . . . . . . . .32
</TABLE>
EXHIBITS
Exhibit A Form of Articles of Amendment
Exhibit B Form of Right Certificate
Exhibit C Form of Summary of Rights
<PAGE>
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (the "AGREEMENT"), dated as of January 14, 1999,
between Colorado MEDtech, Inc., a Colorado corporation (the "COMPANY"), and
American Securities Transfer & Trust, Inc., (the "RIGHTS AGENT").
RECITALS
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "RIGHT") for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the close
of business (as defined below) on December 23, 1998 (the "RECORD DATE"), each
Right representing the right to purchase one one-hundredth of a Preferred Share
(subject to adjustment), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined); PROVIDED, HOWEVER, that Rights may be
issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the Redemption Date and the Final
Expiration Date in accordance with Section 22.
AGREEMENT
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 meaning
indicated:
"ACQUIRING PERSON" shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of the
Threshold Percentage or more of the Common Stock then outstanding other than as
a result of a Permitted Offer, but shall not include any Exempt 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 the Threshold Percentage or more of the
Common Stock of the Company then outstanding; PROVIDED, HOWEVER, that if a
Person shall become the Beneficial Owner of the Threshold Percentage or more of
the Common Stock of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, increase the
number of Common Stock of the Company beneficially owned by such Person above
the number of Common Stock of the Company beneficially owned by such Person at
the time of the last such share purchase by the Company, then such Person shall
be deemed to be an "ACQUIRING PERSON." Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that 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
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divests as promptly as practicable a sufficient number 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.
"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.
A Person shall be deemed the "BENEFICIAL OWNER" of, shall be deemed to have
"BENEFICIAL OWNERSHIP" of and shall be deemed to "BENEFICIALLY OWN" any
securities:
(i) which such Person or any of such Person's Affiliates or Associates
is deemed to beneficially own, directly or indirectly, within the meaning of
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, (2) securities which such Person
has a right to acquire on the exercise of Rights at any time prior to the time a
Person becomes an Acquiring Person, or (3) securities issuable upon exercise of
Rights from and after the time a Person becomes an Acquiring Person if such
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 hereof ("ORIGINAL RIGHTS") or pursuant to Section 11(i) or Section 11(n) with
respect to an adjustment to Original Rights; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any
security by reason of such agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such security arises solely from
a revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities)
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for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to subparagraph (ii)(B) above) or disposing of
any securities of the Company.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a day
on which banking or trust institutions in the State of Colorado, or the State in
which the principal office of the Rights Agent is located, are authorized or
obligated by law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., Denver time, on
such date; PROVIDED, HOWEVER, that if such date is not a Business Day it shall
mean 5:00 P.M., Denver time, on the next succeeding Business Day.
"COMMON STOCK" when used with reference to the Company shall mean the
common stock, no par value per share, of the Company. "Common Stock" when used
with reference to any Person other than the Company shall mean the capital stock
(or, in the case of an unincorporated entity, the equivalent equity interest)
with the greatest voting power of such other Person or, if such other Person is
a subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
"DISTRIBUTION DATE" shall have the meaning set forth in Section 3 hereof.
"EXEMPT PERSON" shall mean (i) the Company, (ii) any Subsidiary (as such
term is hereinafter defined) of the Company, (iii) any employee benefit plan of
the Company or of any Subsidiary of the Company, and (iv) any entity or trustee
holding Common Stock for or pursuant to the terms of any such plan or for the
purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
"FINAL EXPIRATION DATE" shall have the meaning set forth in Section 7
hereof.
"NASDAQ" shall mean the automated quotation system operated by the National
Association of Securities Dealers, Inc.
"PERSON" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"PERMITTED OFFER" shall mean a tender offer or an exchange offer for all
outstanding shares of Common Stock of the Company at a price and on terms
determined by the Board of Directors of the Company, after receiving advice from
one or more investment banking firms, to be (a) fair to shareholders (taking
into account all factors which the Board of Directors deems relevant) and (b)
otherwise in the best interests of the Company and its shareholders and which
the Board of Directors determines to recommend to the shareholders of the
Company.
3
<PAGE>
"PREFERRED SHARES" shall mean shares of a Series A Junior Participating
Preferred Stock, no par value per share, of the Company having the rights and
preferences set forth in the form of Articles of Amendment attached to this
Agreement as Exhibit A.
"REDEMPTION DATE" shall have the meaning set forth in Section 7 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"STOCK ACQUISITION DATE" shall mean the first date of public announcement
(which for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such or such earlier date
as a majority of the Board of Directors shall become aware of the existence of
an Acquiring Person.
"SUBSIDIARY" of any Person shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.
"THRESHOLD PERCENTAGE" shall mean 15%.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the Stock Acquisition
Date or (ii) the tenth Business Day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or of the first public announcement of the intention of
such Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming, or after
the consummation of which any Person would be, an Acquiring Person (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "DISTRIBUTION DATE"), (1) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates, and (2) the Rights and the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Stock. As
soon as practicable after
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<PAGE>
the Distribution Date, the Company will promptly notify the Rights Agent
thereof, will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent, if requested and
provided with a shareholder list by the transfer agent of the Common Stock,
will send) by first-class, postage-prepaid mail, to each record holder of
Common Stock as of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person),
at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "RIGHT
CERTIFICATE"), evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "SUMMARY OF RIGHTS"), by
first-class, postage-prepaid mail, to each record holder of Common Stock as of
the close of business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the holders
thereof. Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of any certificate for
Common Stock outstanding on the Record Date, also shall constitute the transfer
of the Rights associated with the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without limitation,
upon transfer of outstanding Common Stock, disposition of Common Stock out of
treasury stock or issuance or reissuance of Common Stock out of authorized but
unissued shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Colorado
MEDtech Corporation and RIGHTS AGENT, dated as of January 14, 1999,
as the same may be amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of Colorado MEDtech, 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. Colorado MEDtech, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
as set forth in the Rights Agreement, Rights owned by or issued or
transferred to any Person who becomes an Acquiring Person or an
Associate or Affiliate thereof (as defined in the Rights Agreement)
and certain transferees thereof may become null and void.
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With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise 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 are no longer
outstanding. Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the
rights of any holder of the Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be substantially in the
form set forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and which do not increase the duties or
responsibilities of the Rights Agent and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of the Nasdaq Stock Market or of any other stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11 and 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share as shall be set forth therein at the price per one
one-hundredth of a Preferred Share set forth therein (the "PURCHASE PRICE"), but
the number of such one one-hundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President, any of its Vice Presidents or its
Treasurer either manually or by facsimile signature and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
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(b) Following the Distribution Date and receipt by the Rights Agent of the
list of record holders of the Rights, the Rights Agent will keep or cause to be
kept, at an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 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 earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates. The Rights Agent shall have no duty or
obligation under this Section unless and until it is satisfied that all such
taxes and/or charges have been paid.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the close of business on the earlier of
the Redemption Date or the Final Expiration Date, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security satisfactory to them, and, at the
Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
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purchase on the reverse side thereof duly executed, to the Rights Agent at
the office or agency of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at any time which is
both after the Distribution Date and prior to the earliest of (i) the close
of business on January 14, 2009 (the "FINAL EXPIRATION DATE"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"REDEMPTION DATE") or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $55.00, shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the Preferred Shares to be purchased and an amount equal to any applicable
tax or governmental charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) requisition from (A) any transfer agent for
the Preferred Shares certificates for the number of shares of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) the Company or the depositary agent, as
the case may be, scrip or depositary receipts representing interests in such
number of Preferred Shares as are to be purchased (in which case certificates
for the Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) promptly after receipt of
such certificates, scrip or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and (iii)
when appropriate, after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder of
any Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the exercisable Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7
unless such registered holder shall have (i) properly completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such
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additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof as the Company or Rights Agent shall reasonably
request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares (to the
extent available and subject to Section 11(a)(iii) herein) that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) At such time, if any, as the Preferred Shares issuable upon the
exercise of Rights may be listed or admitted to trading on the NASDAQ or 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 (but only to
the extent that the Board of Directors determines that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed or admitted to trading on the NASDAQ or listed on any other exchange upon
official notice of issuance upon such exercise.
(c) The Company may prepare and file, as soon as practicable after the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and use its best efforts to
cause such registration statement to (i) become effective as soon as practicable
after such filing and (ii) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of
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the Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. The Company shall
provide promptly a copy of all such announcements to the Rights Agent.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (and, following the time
that a Person becomes an Acquiring Person, other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates therefor (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
other securities) upon the exercise of Rights. The Company shall not, however,
be required to pay any tax or charge which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares (or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates, scrip or depositary receipts for Preferred Shares
(or other securities) upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by that holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE.
Each Person in whose name any certificate for Preferred Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Shares represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable taxes or charges) was made; PROVIDED, HOWEVER, that if the date of
such surrender and payment is a date upon which the Preferred Share 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 Share transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
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SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES AND NUMBER OF
RIGHTS.
The Purchase Price, the number of Preferred Shares or other securities or
property purchasable upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification,
and the number and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Share transfer books of
the Company were open, the holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination
or reclassification. If an 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 and except as otherwise provided in this
Section 11(a)(ii), in the event any Person becomes an Acquiring Person, each
holder of a Right shall thereafter have the right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement, and, in lieu of
Preferred Shares, such number of shares of Common Stock as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right is then exercisable
and dividing that product by (B) 50% of the then current per share market price
of the Company's Common Stock (determined pursuant to Section 11(d) hereof) on
the date of the occurrence of such event. Notwithstanding anything in this
Agreement to the contrary, however, from and after the time (the "INVALIDATION
TIME") when any Person first becomes an Acquiring Person, any Rights that are
beneficially owned by (C) any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), (D) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the invalidation time or
(E) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the invalidation time
pursuant to either (1) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding which has the purpose or
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effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be null and void without any further
action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement.
The Company shall use all reasonable efforts to ensure that the provisions
of this Section 11(a)(ii) are complied with, but neither the Company nor the
Rights Agent shall have any liability to any holder of Right Certificates or
other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the invalidation time, no Right Certificate shall
be issued pursuant to Section 3 or Section 6 hereof that represents Rights
that are or have become null and void pursuant to the provisions of this
paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become null and void pursuant to the
provisions of this paragraph (and of which the Rights Agent has been
notified) shall be canceled. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable
only in accordance with Section 13 and not pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exercise of the Rights. In
the event the Company shall, after good faith effort, be unable to take all such
action as may be necessary to authorize such additional shares of Common Stock,
the Company shall substitute, for each share of Common Stock that would
otherwise be issuable upon exercise of a Right, a number of Preferred Shares or
fraction thereof such that the current per share market price of one Preferred
Share multiplied by such number or fraction is equal to the current per share
market price of one share of Common Stock as of the date of issuance of such
Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Common Stock ("PREFERRED SHARE
EQUIVALENTS")) or securities convertible into Preferred Shares or preferred
share equivalents at a price per Preferred Share or preferred share equivalent
(or having a conversion price per share, if a security convertible into
Preferred Shares or preferred share equivalents) less than the then current per
share market price of the Preferred Shares (determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares and preferred share equivalents
outstanding on such record date plus the number of Preferred Shares and
preferred share equivalents which the aggregate offering price of the total
number of Preferred Shares and/or preferred share equivalents so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of Preferred Shares and preferred share equivalents
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outstanding on such record date plus the number of additional Preferred Shares
and/or preferred share equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Preferred Shares and preferred share equivalents owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares
(determined pursuant to Section 11(d) hereof) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share, and the denominator of which shall be such current per
Preferred Share market price (determined pursuant to Section 11(d) hereof).
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "CURRENT PER SHARE MARKET PRICE" of any security
(a "SECURITY") for the purpose of this Section 11(d)) on any date shall be
deemed to be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to but not including such date; PROVIDED, HOWEVER,
that in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares
of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security, and prior to
the expiration of 30 Trading Days after but not including the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case,
the Current Per Share Market Price shall be appropriately adjusted to reflect
the current market price per share equivalent
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of such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NASDAQ or, if the
Security is not listed or admitted to trading on the NASDAQ, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "TRADING DAY" shall mean a day
on which the NASDAQ or the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on the
NASDAQ or any national securities exchange, a Business Day. If the Common
Stock is not publicly traded, "Current Per Share Market Price" shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent.
For the purposes of any computation hereunder, the "Current Per Share
Market Price" of the Preferred Shares shall be determined in accordance with the
method set forth in this Section 11(d). If the Preferred Shares are not
publicly traded, the "Current Per Share Market Price" of the Preferred Shares
shall be conclusively deemed to be the Current Per Share Market Price of the
Common Stock as determined pursuant to this Section 11(d) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither the
Common Stock nor the Preferred Shares are publicly held or so listed or traded,
"Current Per Share Market Price" of the Preferred Shares shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any share or other security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than the
Preferred Shares, thereafter the number of such other shares so
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receivable upon exercise of a Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11(a)
through (c) and 11(h) hereof, and the provisions of Sections 7, 9, 10, 13 and
14 hereof with respect to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), subject to the provisions of Sections 11(a) and 13, upon each
adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (A) the number of one one-hundredths of a share
covered by a Right immediately prior to such adjustment by (B) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company 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 one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each 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 (and promptly deliver a copy of
such announcement to the Rights Agent) of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
may, as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed
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shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares or other shares of capital 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 nonassessable Preferred Shares or other such shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect (and shall provide the Rights Agent with notice of
such election) to defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash or Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares Stock shall not be taxable to such
shareholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of a dividend payable in Common Stock) into a greater or lesser number
of shares
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of Common Stock, then in any such case, (i) the number of one one-hundredths
of a Preferred Share purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately before such event and the denominator of which
is the number of shares of Common Stock outstanding immediately after such
event, and (ii) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
share of Common Stock outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(n) shall
be made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an event occurs
which would require an adjustment under Section 11(a)(ii) and this Section
11(n), the adjustments provided for in this Section 11(n) shall be in
addition and prior to any adjustment required pursuant to Section 11(a)(ii).
(o) The Company agrees that, after the earlier of the Distribution Date
or the Stock Acquisition Date, it will not, except as permitted by Sections
23, 24 or 27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights, unless such action is approved by the Board of
Directors.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computation accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Stock or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof (if so required under Section 25 hereof). The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall neither have any duty with respect to nor
be deemed to have knowledge of any such adjustment unless and until it shall
have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNINGS POWER.
(a) In the event, directly or indirectly, at any time after any Person has
become an Acquiring Person, (i) 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; (ii) any Person shall
consolidate with the Company, or any Person shall merge with and 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 Common Stock shall be changed into or exchanged for stock or
other securities of any other Person
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(or of the Company) or cash or any other property; (iii) the Company shall
effect a statutory share exchange with the outstanding shares of Common Stock
of the Company being exchanged for stock or other securities of any other
Person, cash or property; or (iv) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating
50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company
or one or more of its wholly owned Subsidiaries); or, if upon the
consummation of any of the events set forth in the preceding clauses (i)
through (iv) there is an Acquiring Person, then upon the first occurrence of
any such event (a "SECTION 13 EVENT"), proper provision shall be made so
that: (1) each holder of record of a Right (other than Rights which have
become void pursuant to Section 11(a)(ii)) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of validly
issued, fully paid and non-assessable and freely tradable shares of Common
Stock of the Principal Party (as defined herein) not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a Section
13 Event and (B) dividing that product by 50% of the then Current Per Share
Market Price of the Common Stock of such Principal Party (determined pursuant
to Section 11(d) hereof) on the date of consummation of such Section 13
Event; PROVIDED, HOWEVER, that the Purchase Price and the number of shares
of Common Stock of such Principal Party issuable upon exercise of each Right
shall be further adjusted as provided in Section 11(f) of this Agreement to
reflect any events occurring in respect of such Principal Party after the
date of such Section 13 Event; (2) 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; (3) the term "COMPANY" shall thereafter be deemed to refer to such
Principal Party; and (4) 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 accordance with Section 9 hereof) in connection
with such consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; PROVIDED THAT, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of
assets or other extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon exercise
of a Right and payment of the Purchase Price as provided in this Section
13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of
such transaction, owned the Common Stock of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "PRINCIPAL PARTY" shall mean
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(i) in the case of any transaction described in (i), (ii) or (iii) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which the shares of Common Stock of the Company are
converted in such merger, consolidation or exchange, or, if there is more than
one such issuer, the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B) if no securities
are so issued, (1) the Person that is the other party to the merger, if such
Person survives said merger, or, if there is more than one such Person, the
Person the shares of Common Stock of which have the greatest aggregate market
value of shares outstanding or (2) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (3) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in clause (iv) of the
first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons as is the issuer of Common Stock having the
greatest aggregate market value of shares outstanding; PROVIDED, HOWEVER,
that in any such case described in the foregoing clause (b)(i) or (b)(ii),
(1) if the Common Stock of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and if such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, the
term "Principal Party" shall refer to such other Person, or (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value, or (3) if such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any Section 13 Event unless prior
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, exchange, sale or transfer of
assets shall not result in a default by the Principal Party under this Agreement
as the same shall have been assumed by the Principal Party pursuant to Sections
13(a) and (b) hereof and providing that, as soon as practicable after executing
such agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an
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appropriate form, use its best efforts to cause such registration statement
to become effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of the close of business on the Redemption Date or the Final
Expiration Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the NASDAQ or on a national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on the
NASDAQ or such securities exchange or, if the Common Stock of the Principal
Party shall not be listed or admitted to trading on the NASDAQ or a national
securities exchange, to cause the Rights and the securities receivable upon
exercise of the Rights to be reported by such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its articles or certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then, in
such event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after
a Person first becomes an Acquiring Person, enter into any transaction of the
type contemplated by clauses (i) - (iv) of Section 13(a) hereof if (i) at the
time of or immediately after such consolidation, merger, exchange, sale,
transfer or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise
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eliminate the benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such consolidation, merger, sale,
transfer of other transaction, the shareholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or
nature of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
(f) The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sale or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NASDAQ or, if the Rights are not listed or admitted to trading
on the NASDAQ, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it, or by scrip; PROVIDED, HOWEVER, that (i) if the Company issues
such scrip, then such scrip shall not confer upon the holder any voting or other
rights of a shareholder of the Company, but the Company shall from time to time,
upon demand of any holder
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of such scrip and the surrender of scrip for fractional Preferred Shares
aggregating one whole Preferred Share, issue one whole Preferred Share to
such holder and (ii) if the Company issues depositary receipts pursuant to
any such agreement, such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Preferred
Share. For the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as
determined pursuant to Section 11(d)) for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Distribution Date, of
the Common Stock), on his own behalf and for his own benefit, may enforce,
and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided therein and
in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock; (b) after the Distribution
Date, the Right Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office or agency of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a proper instrument
of transfer; and (c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right
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Certificates or the 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. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a 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 this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay in a timely manner to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the preparation, delivery,
administration, execution and any amendment of this Agreement and the
exercise and performance of its duties hereunder, which shall include, but
not be limited to, reasonable compensation for services rendered by officers
and employees of the Rights Agent which are in addition to the ministerial
and administrative services performed by the Rights Agent under this
Agreement. The Company also agrees to indemnify the Rights Agent, its
officers, employees, agents and directors for, and to hold them harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability arising therefrom,
directly or indirectly against the Rights Agent, its officers, employees,
agents and directors. Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood
of such loss or damage.
(b) The Rights Agent shall be authorized and protected by the Company and
shall incur no liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its acceptance and administration of this
Agreement in reliance upon any Right Certificate or certificate for the
Preferred Shares (or for scrip or depositary receipts evidencing fractional
interests in Preferred Shares) or Common Stock or for other securities of the
Company, instrument of
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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. The
Rights Agent shall not be deemed to have notice of any action or event unless
such notice was given as provided above.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties hereto; provided, that such Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section
21 hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes only the duties and obligations expressly
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or
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in respect of any action taken, suffered or omitted by it in good faith and
in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including without limitation the identity of any Acquiring Person and the
determination of current market price) be proved or established by the Company
prior to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for, nor be under any
responsibility in respect of, the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any transfer to an
Acquiring Person (unless the Company has delivered written notice of such
Acquiring Person prior to such transfer) or any change in the exercisability
of the Rights (including the Rights becoming null and void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3,
11, 13, 23 and 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a certificate
furnished pursuant to Section 12, describing such change or adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred
Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Preferred Shares or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments
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and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Chairman of the
Board, the President, any Vice President, the Secretary or the Treasurer 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, suffered or
omitted by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, affiliate, 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 Person or legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting from any
such act, default, neglect or misconduct absent gross negligence, bad faith or
willful misconduct.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is
not an Acquiring Person (or an Affiliate or Associate thereof), the Rights
Agent shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Stock and Preferred Shares
by registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by United States mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock by registered or certified mail, and
following the Distribution Date, to the holders of the Right Certificates by
United States mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the
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<PAGE>
registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be either (a) a corporation or other entity organized and doing
business under the laws of the United States or the State of Colorado (or of
any other state of the United States so long as such corporation is
authorized to do business in the State of Colorado), in good standing, having
an office or depositary drop in the State of Colorado, which is authorized to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has or is
a subsidiary of a corporation which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million, or (b)
an Affiliate of a corporation or other entity 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 Preferred Shares, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such forms as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at any time prior to the
earlier of (i) the close of business on the tenth day following the Stock
Acquisition Date, subject to extension by the Board of Directors as provided in
Section 27 hereof, or (ii) the close of business on the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price
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of $0.0001 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
redemption price being hereinafter referred to as the "REDEMPTION PRICE"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the current market price of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice (including prompt notice thereof to the Rights
Agent) of any such redemption; PROVIDED, HOWEVER, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the 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 shall state the method by which the payment of the
Redemption Price will be made.
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person first becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof and subject to
adjustment as set forth in clause (c) below (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of shares
of Common Stock aggregating 50% or more of the shares of Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of 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 (and prompt
notice thereof to the Rights Agent); PROVIDED, HOWEVER, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall promptly mail a notice of any such exchange to the
Rights Agent and to all of the holders of such Rights at their last addresses as
they appear upon the registry
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books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of 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 the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company may, in its discretion, take such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the
Rights. In the event that the Company shall determine not to take such
action or shall, after good faith effort, be unable to take such action as
may be necessary to authorize such additional shares of Common Stock, the
Board of Directors, at its option shall (i) adjust the Exchange Ratio to
permit the Company to use all of its issued but not outstanding and its
authorized but unissued Common Stock to effectuate a full exchange of all of
the then outstanding and exercisable Rights or (ii) substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a
number of Preferred Shares or fraction thereof such that the Current Per
Share Market Price of one Preferred Share multiplied by such number or
fraction is equal to the Current Per Share Market Price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not, in connection with any exchange pursuant to
this Section 24, 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, there shall be paid 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 Common Share.
For the purposes of this paragraph (d), the current market value of a whole
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares) or (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries
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<PAGE>
(taken as a whole) to any other Person, (v) to effect any statutory share
exchange with the outstanding Common Stock of the Company being exchanged for
stock or other securities of any other corporation or cash or other property,
(vi) to effect the liquidation, dissolution or winding up of the Company or
(vii) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with Section
26 hereof, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of the
Common Stock and/or Preferred Shares, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
the Common Stock and/or Preferred Shares, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof,
a notice of the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate 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:
Colorado MEDtech, Inc.
6175 Longbow Drive
Boulder, CO 80301
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Securities Transfer & Trust, Inc.
938 Quail Street, Ste. 101
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Lakewood, CO 80215
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by United States mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
The Company may from time to time supplement or amend this Agreement
without the approval of the Rights Agent or any holders of Right Certificates
in order (i) to extend the period during which the Rights may be redeemed,
provided that at the time of such amendment no Person has become an Acquiring
Person, (ii) to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions of this Agreement, (iii) prior to the time that any Person becomes
an Acquiring Person, to otherwise change or supplement any provision in this
Agreement in any manner which the Company may deem necessary or desirable,
(iv) subject to clause (i) of this Section 27, from and after the time that
any Person become an Acquiring Person, to otherwise change or supplement any
provision in this Agreement in any manner which the Company may deem
necessary or desirable and which shall not materially adversely affect the
interests of the Rights Agent or holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person), or
(v) to extend the Final Expiration Date and make such adjustments to the
Purchase Price and other terms hereof as the Board of Directors shall
determine to be appropriate under the circumstances. Upon the delivery of a
certificate from an appropriate officer of the Company and, if requested by
the Rights Agent, an opinion of counsel, 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.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the 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 Right Certificates (and, prior to the Distribution
Date, the Common Stock).
SECTION 30. SEVERABILITY.
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If any term, provision, covenant or restriction of this Agreement or
applicable to 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 31. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Colorado and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State; PROVIDED, HOWEVER, that the effect of any provision on the rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to contracts to be
made and performed entirely within such State.
SECTION 32. 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 33. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Colorado MEDtech, Inc.
By: /s/ Bruce L. Arfmann
---------------------------------
Its: CFO
--------------------------------
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By: /s/ Kathleen Heagerty
---------------------------------
Its: Operations Manager
--------------------------------
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EXHIBIT A
FORM OF ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
COLORADO MEDTECH, INC.
Article IV of the Articles of Incorporation, as amended, is amended to
add a new section B, as follows:
B. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK.
Out of the five million (5,000,000) shares of Preferred Stock, no
par value per share, authorized under Section IV.A., a series of preferred stock
of the Corporation is created, and the designation and amount thereof and the
relative rights and preferences of the shares of such series, are as follows:
B.1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "PREFERRED SHARES") and the number of
shares constituting the Preferred Shares shall be one hundred fifty thousand
(150,000). Such number of shares may be increased or decreased by resolution
of the Board of Directors and any necessary shareholder approval; PROVIDED,
HOWEVER, that no decrease shall reduce the number of shares of Preferred
Shares to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into Preferred Shares.
B.2. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the
Preferred Shares with respect to dividends, the holders of Preferred Shares,
in preference to the holders of Common Stock, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in
each year (each such date being referred to herein as a "QUARTERLY DIVIDEND
PAYMENT DATE"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Preferred Shares, in
an amount per share (rounded to the nearest cent) equal to the greater of (i)
$1.00 or (ii) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in
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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 Preferred Shares. In the
event the Corporation shall at any time after December 22, 1998, declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Preferred Shares were entitled immediately prior
to such event under clause (ii) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Preferred Shares as provided in paragraph (a) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Preferred Shares from their date of issue. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Preferred
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
B.3. VOTING RIGHTS.
(a) Subject to the provision for adjustment hereinafter set forth, each
Preferred Share shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after December 22, 1998, declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Preferred Shares were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a
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fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(c) Except as set forth herein or required by law, holders of Preferred
Shares shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
B.4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Shares as provided in Section B.2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Preferred Shares outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares;
(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 Preferred Shares, except
dividends paid ratably on the Preferred Shares 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 Preferred Shares; PROVIDED, HOWEVER, 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 Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for consideration
any Preferred Shares, or any stock ranking on a parity with the Preferred
Shares, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series
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<PAGE>
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
B.4, purchase or otherwise acquire such shares at such time and in such
manner.
B.5. REACQUIRED SHARES.
Any Preferred Shares purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock and may be reissued as part of
a new series of preferred stock subject to the conditions and restrictions on
issuance set forth herein, in the Amended and Restated Articles of
Incorporation, or in any other certificate of designation creating a series of
preferred stock or any similar stock or as otherwise required by law.
B.6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Preferred Shares unless, prior thereto, the holders of Preferred
Shares shall have received the greater of (i) $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, or (ii) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per share to holders of
Common Stock, or (b) to the holders of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Preferred Shares, except distributions made ratably on the Preferred Shares
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after December
22, 1998, declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the aggregate amount to which holders of shares of Preferred Shares were
entitled immediately prior to such event under clause (a)(ii) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
4
<PAGE>
B.7. CONSIDERATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case each share of Preferred Shares shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after December 22, 1998, declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) 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 Preferred Shares
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
B.8. NO REDEMPTION.
The shares of Preferred Shares shall not be redeemable.
B.9. RANK.
The Preferred Shares shall rank, with respect to the payment of dividends
and the distribution of assets, junior to all series of any other class of the
Corporation's preferred stock.
B.10. FRACTIONAL SHARES.
Preferred Shares may be issued in fractions of a share which are integral
multiples of one one-hundredth of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to receive dividends, participate
in distributions and to have the benefit of all other rights of holders of
Preferred Shares.
B.11. AMENDMENT.
The Amended and Restated Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or rights of the Preferred Shares so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Preferred Shares, voting together as a single class.
5
<PAGE>
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. _______ _____ Rights
NOT EXERCISABLE AFTER JANUARY 14, 2009 OR EARLIER IF TERMINATED BY THE
COMPANY OR IF THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.0001
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(i) OF SUCH AGREEMENT.]
RIGHTS CERTIFICATE
This certifies that ______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of January 14, 1999 (the "Rights
Agreement"), between Colorado MEDtech, Inc., a Colorado corporation (the
"COMPANY"), and American Securities Transfer & Trust, Inc. (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.,
Denver, Colorado time, on January 14, 2009, at the office of the Rights Agent
designated for such purpose, or at the office of its successor as Rights
Agent, one one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, no par value per share, (the "PREFERRED
SHARES"), of the Company, at a purchase price of $55.00 per Preferred Share
(the "PURCHASE PRICE"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above are the number and Purchase Price of the
Rights as of January 14, 1999, based on the Common Shares as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the
number and kind of Preferred Shares or other securities which may be
<PAGE>
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 the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate (i) may be redeemed by the Company, at its option, at a
redemption price of $.0001 per Right or (ii) may be exchanged by the Company in
whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office 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
amount of securities as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part (other than pursuant to Section
11(a)(ii) of the Rights Agreement), 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.
No fractional portion of less than one one-hundredth of a Preferred Share
will be issued upon the exercise of any Right or Rights evidenced hereby but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
<PAGE>
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ___________________.
ATTEST:
COLORADO MEDTECH, INC.
By:
----------------------------------
President
By:
----------------------------------
Secretary
Countersigned:
AMERICAN SECURITIES TRANSFER & TRUST, INC.
as Rights Agent
By:
-------------------------------
Its:
-----------------------------
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ __ ] is [ __ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person,
or an Affiliate or Associate of any such Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ __ ] did [ __ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: _______________________, 19___
- -----------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
COLORADO MEDTECH, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On December 23, 1998, the Board of Directors of Colorado MEDtech, Inc. (the
"COMPANY") declared a dividend of one preferred share purchase right (a "RIGHT")
for each outstanding share of the Company's common stock, no par value, (the
"COMMON STOCK"). The Rights were issued pursuant to a Rights Agreement dated as
of January 14, 1999 (the "RIGHTS AGREEMENT") between the Company and American
Securities Transfer and Trust, Inc., as Rights Agent (the "RIGHTS AGENT"). The
dividend is payable on January 14, 1999 to the shareholders of record on
December 23, 1998 (the "RECORD DATE"). The following summary does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement and all exhibits thereto, which is incorporated herein by reference,
including the definition of certain terms contained therein.
TERMS OF THE RIGHT
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of newly authorized Series A Junior Participating
Preferred Stock, no par value, of the Company (the "PREFERRED STOCK") at a price
of $55.00 per one one-hundredth of a share of Preferred Stock (the "PURCHASE
PRICE"), subject to adjustment as described in the Rights Agreement. In
addition, upon the occurrence of certain takeover events and a Distribution Date
(as defined below), the holder of each Right will be entitled to purchase from
the Company a number of shares of common stock in the Company ("COMMON STOCK")
which at the time of exercise has a market value of two times the Purchase
Price.
ISSUANCE OF RIGHTS
The Rights will be evidenced by Common Stock certificates until the earlier
to occur of:
(i) 10 days following a public announcement or awareness by the Board of
Directors that a person or group of affiliated or associated persons (an
"ACQUIRING PERSON") have acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock, other than pursuant to a Permitted Offer (as
defined below); or
<PAGE>
(ii) 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding shares of Common Stock, other than
pursuant to a Permitted Offer (the earlier of such dates being called the
"DISTRIBUTION DATE").
A "PERMITTED OFFER" is a tender offer or an exchange offer for all
outstanding shares of Common Stock of the Company at a price and on terms
determined by the Board of Directors of the Company, after receiving advice from
one or more investment banking firms, to be (i) fair to shareholders (taking
into account all factors which the Board of Directors deems relevant) and (ii)
otherwise in the best interests of the Company and its shareholders and which
the Board of Directors determines to recommend to the shareholders of the
Company.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. 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 issuances of 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 or transfer of any certificates for shares of Common Stock outstanding
as of the Record Date, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
EXERCISE DATE
The Rights are not exercisable until the Distribution Date. The Rights
will expire on January 14, 2009 (the "FINAL EXPIRATION DATE") unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
CERTAIN ADJUSTMENTS
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 certain adjustments from time to time to prevent dilution, for example, in
the event of a stock dividend on or a subdivision, combination or
reclassification of, the Preferred Stock. 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.
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event
<PAGE>
of a stock split of the Common Stock or a stock dividend on the Common Stock
payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
No fraction of a share of Preferred Stock (other than fractions in integral
multiples of one one-hundredth of a share) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the closing price on the last
trading date prior to the date of exercise.
RIGHTS OF PREFERRED STOCK
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holder of shares of Preferred Stock
will be entitled to a minimum preferential liquidation payment of $100.00 per
share but will entitled to an aggregate payment of 100 times the payment made
per share of Common Stock. Each share of Preferred Stock will have 100 votes,
voting together with the shares of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock. These rights are subject to
adjustment in the event of a stock dividend on the shares of Common Stock or a
subdivision, combination or consolidation of the shares of Common Stock.
EXERCISE OF RIGHTS
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will have the right to receive upon exercise of a Right at the then current
Purchase Price, that number of shares of Common Stock (or, in lieu of Common
Stock, such number or fraction of shares of Preferred Stock equivalent in value
to such number of shares of Common Stock) having a market value of two times the
Purchase Price.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, each holder of
a Right (other than Rights beneficially owned by an Acquiring Person which will
have become void) will have the right to receive, upon the exercise of the Right
at the then current Purchase Price, that number of shares of common stock of the
person with whom the Company has engaged in the foregoing transaction having at
the time of such transaction a market value of two times the Purchase Price.
EXCHANGE RIGHT
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock or the occurrence of an event described in the prior
paragraph, the Board of Directors may exchange the Rights (other than Rights
owned by an Acquired Person, which will have become
<PAGE>
void), in whole or in part, at an exchange ratio of one share of Common Stock
per Right (subject to adjustment).
REDEMPTION
At any time prior to the close of business on the day 10 days after an
Acquiring Person becomes such, the Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.0001 per Right (the "REDEMPTION PRICE").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
AMENDMENT
For so long as no person has become an Acquiring Person, the Company may
amend the Rights in any manner. After a person has become an Acquiring Person,
the Company may amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit to Form 8-A filed by
the Company on January 14, 1999. A copy of the Rights Agreement is available
free of charge from the Company.
Colorado MEDtech, Inc.
6175 Longbow Drive
Boulder, CO 80301
ATTN: Bruce L. Arfmann, Chief Financial Officer
(303) 530-2660
