<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
-----------------------
Date of Report (Date of earliest
event reported): June 12, 1996
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BIO-VASCULAR, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-13907 41-1526554
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2575 University Avenue, St. Paul, Minnesota 55114-1024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612/603-3700
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ITEM 5. OTHER EVENTS
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On June 12, 1996, the Board of Directors of Bio-Vascular, Inc. (the
"Company") declared a dividend distribution of one common stock purchase right
(a "Right") for each outstanding share of the Company's Common Stock, par value
$.01 per share (the "Common Shares"), payable to shareholders of record at the
close of business on July 15, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company at any time following the
Distribution Date (as defined below) one-tenth of a Common Share, or a
combination of securities and assets of equivalent value, at a purchase price of
$6.00 per one-tenth Common Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated as of June 12, 1996, between the Company and American
Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be evidenced, with respect to any of the Common
Share certificates outstanding as of the Record Date, by such Common Share
certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Shares and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Shares, other than
as a result of a Permitted Offer, as defined (the "Stock Acquisition Date");
(ii) the close of business on the tenth business day (or such later date as the
Board of Directors, acting by a majority of the Continuing Directors, may
determine) following the commencement of a tender offer or exchange offer (other
than a Permitted Offer, as defined) that would result in a person or group
beneficially owning 15% or more of the outstanding Common Shares; or (iii) the
close of business on the tenth business day after a determination by at least a
majority of the Continuing Directors that a Person is an Adverse Person, and
that such Person, alone or together with its affiliates and associates, has
become the beneficial owner of a substantial amount of Common Shares (which
amount shall in no event be less than 10% of the Common Shares then outstanding)
and (a) such beneficial ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where at least a majority of the Continuing Directors
determines that the best long-term interests of the Company and its shareholders
would not be served by taking such action or entering into such transaction or
series of transactions at that time or (b) such beneficial ownership is causing
or reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board who are Continuing Directors, who are not officers
of the Company and who are not Acquiring Persons or Affiliates, Associates,
nominees or representatives of an Acquiring Person, to be adequate and otherwise
in the best interests of the Company and its shareholders (other than the Person
or any Affiliate or Associate thereof on whose behalf the offer is being made).
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A "Continuing Director" is (i) any person who is a member of the Board of
Directors prior to June 12, 1996, while such person is a member of the Board of
Directors, who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative or designee of an
Acquiring Person or an Adverse Person or any such affiliate or associate, or
(ii) any person who subsequently becomes a member of the Board of Directors who
is not an Acquiring Person or an Adverse Person, or an affiliate or associate of
either of the foregoing, or a representative or designee of an Acquiring Person,
an Adverse Person or any such affiliate or associate, and whose nomination or
election to the Board of Directors is recommended or approved by a majority of
the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after July 15, 1996 will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificate for Common Shares outstanding will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 11, 2006, unless earlier redeemed or exchanged
by the Company as described below (the earliest of all such dates, the
"Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates will
be mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights. All Common Shares issued prior to the earlier of the
Distribution Date and the Expiration Date will be issued with Rights. Common
Shares issued after the Distribution Date upon the exercise of employee stock
options, issuances under other employee stock benefit plans or the conversion of
convertible securities issued prior to the Distribution Date will be issued with
Rights.
In the event (i) that a person or group, with certain exceptions, becomes
the beneficial owner of more than 15% of the then outstanding Common Shares,
other than as a result of a Permitted Offer or (ii) at least a majority of the
Continuing Directors determines that a person is an Adverse Person, then each
holder of a Right will thereafter have the right to receive, upon exercise for a
purchase price equal to ten times the Purchase Price of the Right, that number
of Common Shares (or in certain circumstances, cash, property or other
securities of the Company) having a market value equal to twenty times the
Purchase Price of the Right. The Rights, however, are not exercisable following
the occurrence of either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
Notwithstanding any of the foregoing, following the occurrence of either of the
events set forth above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person (or certain related persons and transferees) will be
null and void. The events set forth in this paragraph are referred to as
"Section 11(a)(ii) Events."
For example, at a Purchase Price of $6.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following a Section 11(a)(ii) Event would entitle its holder to purchase $120
worth of Common Shares (or other consideration as noted above) for $60.
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In the event that, at any time following the Stock Acquisition Date, other
than pursuant to a Permitted Offer, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the surviving
corporation or the Common Shares are changed or exchanged or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise thereof for a purchase price
equal to ten times the current Purchase Price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value equal to twenty times the Purchase Price of
the Right. The events set forth in this paragraph are referred to as "Section 13
Events," and the Section 11(a)(ii) Events and the Section 13 Events are
collectively referred to as the "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, at the
election of a majority of the Continuing Directors, the Company may exchange the
Rights (other than Rights which have become void), in whole or in part, for
Common Shares, with each Right to be exchanged for a number of Common Shares
equal to the result obtained by dividing (x) a number equal to ten times the
Purchase Price by (y) the current market price per Common Share (subject to
adjustment). In any such exchange, the Company, at its option, may substitute a
series of preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
The Purchase Price payable and the number of Common Shares issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, split,
combination, consolidation or reclassification of, the Common Shares, (ii) if
all holders of any security of the Company are granted rights, options or
warrants to subscribe for or purchase Common Shares or convertible securities at
less than the current market price of the Common Shares, or (iii) upon the
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company will not be required to issue fractional Common Shares, and,
in lieu of such fractional Common Shares, an adjustment in cash will be made
based on the market price of the Common Shares on the last trading date prior to
the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
redemption of the Rights, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or receive dividends. The creation of the Rights should not be taxable
to shareholders. Shareholders may, however, depending upon the circumstances,
recognize taxable income in the event that the rights become exercisable for
Common Shares (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.
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Any of the provisions of the Rights Agreement, including the definition of
Acquiring Person or the Purchase Price, may be amended by at least a majority of
the Continuing Directors prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by at least a
majority of the Continuing Directors in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or Adverse Person), or to
shorten or lengthen certain time periods under the Rights Agreement. However, no
amendment to adjust the time period governing redemption can be made at such
time as the Rights are not redeemable.
As of June 1, 1996, there were 9,440,622 Common Shares outstanding and
2,442,245 Common Shares reserved for issuance under outstanding warrants and
various stock-based compensation plans of the Company. Each outstanding Common
Share on July 15, 1996 will receive one Right. So long as the Rights Agreement
remains in effect and the Rights continue to remain attached to and trade with
the Common Shares, the Company will issue one Right for each Common Share issued
between the Record Date and any Distribution Date, so that all outstanding
shares will have attached Rights. Assuming 9,440,622 shares of Common Stock are
outstanding on the Record Date, the Company will have initially reserved for
issuance upon exercise of the Rights 944,062 Common Shares.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by at least a
majority of the Continuing Directors of the Company because the Continuing
Directors may, at their option, either (i) declare the transaction to be a
"permitted offer," or (b) at any time before the close of business on the 10th
business day following the Stock Acquisition Date or the date on which a person
is determined to be an Adverse Person, redeem the then outstanding Rights at the
redemption price.
ITEM 7. EXHIBITS.
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4.1 Form of Rights Agreement, dated as of June 12, 1996, between Bio-
Vascular, Inc. and American Stock Transfer & Trust Company, which
includes as Exhibit A the form of Rights Certificate (filed herewith
electronically). Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until as soon as practicable after the
Distribution Date (as defined therein).
99.1 Press Release dated June 19, 1996 (filed herewith electronically).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 24, 1996 BIO-VASCULAR, INC.
By:/s/ JOHN T. KARCANES
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John T. Karcanes
President and Chief Executive Officer
6
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INDEX TO EXHIBITS
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<TABLE>
<CAPTION>
ITEM
- ----
NO. DESCRIPTION METHOD OF FILING
- --- ----------- ----------------
<S> <C> <C>
4.1 Form of Rights Agreement, dated
as of June 12, 1996, between
Bio-Vascular, Inc. and American
Stock Transfer & Trust Company,
which includes as Exhibit A the form
of Rights Certificate. Pursuant to
the Rights Agreement, printed Rights
Certificates will not be mailed
until as soon as practicable after
the Distribution Date (as defined
therein)............................ Filed herewith electronically.
99.1 Press Release dated June 19, 1996... Filed herewith electronically.
</TABLE>
<PAGE>
RIGHTS AGREEMENT
between
BIO-VASCULAR, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
dated as of June 12, 1996
<PAGE>
Table of Contents
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<TABLE>
<CAPTION>
Section Page
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<S> <C>
1. Certain Definitions .................................................................. 1
2. Appointment of Rights Agent .......................................................... 6
3. Issue of Rights Certificates ......................................................... 6
4. Form of Rights Certificates .......................................................... 8
5. Countersignature and Registration .................................................... 9
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates ........................................ 9
7. Exercise of Rights; Purchase Price; Expiration Date .................................. 10
8. Cancellation and Destruction of Rights Certificates .................................. 12
9. Reservation and Availability of Common Shares; Registration ......................... 12
10. Common Shares Record Date ............................................................ 13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights .......... 14
12. Certificate of Adjusted Purchase Price or Number of Shares ........................... 20
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power ................. 20
14. Fractional Rights and Fractional Shares .............................................. 23
15. Rights of Action ..................................................................... 23
16. Agreement of Rights Holders .......................................................... 24
17. Rights Certificate Holder Not Deemed a Shareholder ................................... 24
18. Concerning the Rights Agent .......................................................... 25
19. Merger or Consolidation or Change of Name of Rights Agent ............................ 25
20. Duties of Rights Agent ............................................................... 26
21. Change of Rights Agent ............................................................... 27
22. Issuance of New Rights Certificates .................................................. 28
</TABLE>
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<TABLE>
<S> <C> <C>
23. Redemption and Termination ......................................... 29
24. Exchange ........................................................... 29
25. Notice of Certain Events ........................................... 30
26. Notices ............................................................ 31
27. Supplements and Amendment .......................................... 32
28. Successors ......................................................... 32
29. Determinations and Actions by the Board ............................ 33
30. Benefits of this Agreement ......................................... 33
31. Severability ....................................................... 33
32. Governing Law ...................................................... 34
33. Counterparts ....................................................... 34
34. Descriptive Headings ............................................... 34
</TABLE>
Exhibits
A - Form of Rights Certificate
B - Summary of Rights Agreement
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RIGHTS AGREEMENT
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This Rights Agreement, dated as of June 12, 1996 (this "Agreement"), is by
and between Bio-Vascular, Inc., a Minnesota corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation, as Rights Agent
(the "Rights Agent").
On June 12, 1996 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company (as the composition of such Board of Directors may
change from time to time, the "Board") authorized and declared a dividend of one
Right for each Common Share (as hereinafter defined) of the Company outstanding
at the close of business (as hereinafter defined) on July 15, 1996 (the "Record
Date"), each Right (individually a "Right" and collectively the "Rights")
initially representing the right to purchase one-tenth of a Common Share, upon
the terms and subject to the conditions hereinafter set forth, and authorized
and directed the issuance of one Right for each Common Share issued between the
Record Date and the earlier of the Distribution Date or the Expiration Date
(both as hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding
(other than as a result of a Permitted Offer (as hereinafter defined)), but
shall not include the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or of any Subsidiary of the Company or
any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person": (i) as the result of an
acquisition of Common Shares by the Company which, by reducing the number
of Common Shares outstanding, increases the proportionate number of Common
Shares beneficially owned by such Person to 15% or more of the Common
Shares then outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 15% or more of the Common Shares then outstanding
by reason of Common Share purchases by the Company and shall thereafter
become the Beneficial Owner of any additional Common Shares, then such
Person shall be deemed to be an "Acquiring Person"; or (ii) who
beneficially owns 15% or more of the outstanding Common Shares but who
acquired Beneficial Ownership of Common Shares without any plan or
intention to seek or affect control of the Company, if such Person promptly
enters into an irrevocable commitment promptly to divest, and thereafter
promptly divests (without exercising or retaining any power, including
voting, with respect to such shares), sufficient shares of Common Shares
(or securities convertible into, exchangeable into or exercisable for
Common Shares) so that such Person ceases to be the Beneficial Owner of 15%
or more of the outstanding shares of Common Shares; or (iii) who
beneficially owns Common Shares consisting solely of one or more (A) Common
Shares beneficially owned pursuant to the grant for exercise of an option
granted to such Person by the Company in connection with an agreement to
merge with, or acquire, the Company entered into prior to a Section
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11(a)(ii) Trigger Date, (B) Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares), beneficially owned by
such Person or its Affiliates or Associates at the time of grant of such
option or (C) Common Shares (or securities convertible into, exchangeable
into or exercisable for Common Shares) acquired by Affiliates or Associates
of such Person after the time of such grant which, in the aggregate, amount
to less than 1% of the outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii).
(d) "Adverse Person" shall mean any Person determined to be an Adverse
Person pursuant to the criteria set forth in Section 11(a)(ii)(B).
(e) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act as in effect on the date hereof.
(f) "Agreement" shall have the meaning set forth in the preamble
clause at the beginning hereof.
(g) (i) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(A) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, beneficially owns;
(B) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
other rights, warrants or options or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (1) securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (2) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (3) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event
which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 (the "Original Rights") or pursuant to Section
11(i) in connection with an adjustment made with respect to any Original
Rights;
(C) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right (sole or shared) to vote
or dispose of or has "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or
any comparable or successor rule, whether or not the Company is subject to
the Exchange Act), including, without limitation, pursuant to any
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agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this Section 1(g)(i)(C) as
a result of an oral or written agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding (1)
arises solely from a revocable proxy given in response to a proxy or
consent solicitation made pursuant to and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act (and if such provisions are not applicable by law such proxy
or solicitation is made in substantially the same manner as if such
provisions were applicable), and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report) (and if the Company is not subject to the Exchange Act,
would not be then reportable if the Company was subject to the Exchange
Act); or
(D) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding, whether or not in writing, for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in Section 1(g)(i)(C)(1)) or disposing of such securities.
(ii) Notwithstanding anything in this definition to the contrary,
the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person is
deemed to own beneficially hereunder.
(h) "Board" shall have the meaning set forth in the recital clause at
the beginning of this Agreement.
(i) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the States of New York or Minnesota
are authorized or obligated by law or executive order to close.
(j) "Close of business" on any given date shall mean 5:00 p.m.
Minneapolis, Minnesota time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m. Minneapolis, Minnesota
time on the next succeeding Business Day.
(k) "Common Shares" when used with reference to the Company shall mean
the shares of Common Stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the
Company shall mean: (i) in the case of Persons organized in corporate form,
the shares of capital stock or units of equity security with the greatest
voting power of such Person or, if such Person is a Subsidiary of another
Person, of the Person or Persons which ultimately control or direct the
management of such first-mentioned Person, and (ii) in the case of Persons
not organized in corporate form, the units of beneficial interest which (A)
represent the right to participate generally in the profits and losses of
such Person (including without limitation any flow-through tax benefits
resulting from an ownership interest in such Person) and (B) are entitled
to exercise the greatest voting power of such Person or, in the case of a
limited partnership, shall have the power to remove the general partner or
partners.
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(l) "Company" shall have the meaning set forth in the preamble clause
at the beginning of this Agreement.
(m) "Continuing Director" shall mean (i) any Person who is a member of
the Board, while such Person is a member of the Board, who is not an
Acquiring Person or an Adverse Person, or an Affiliate or Associate of any
such Person, or a representative or designee of an Acquiring Person or an
Adverse Person or of any such Affiliate or Associate, and was a member of
the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member
of the Board, who is not an Acquiring Person or an Adverse Person, or an
Affiliate or Associate of any such Person, or a representative or designee
of an Acquiring Person or an Adverse Person or of any such Affiliate or
Associate, if such Person's nomination for election or election to the
Board is recommended or approved by a majority of the Continuing Directors.
(n) "Current Market Price" shall have the meaning set forth in Section
11(d).
(o) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(p) "Distribution Date" shall have the meaning set forth in Section
3(a).
(q) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(a)(iii).
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(s) "Exchange Ratio" shall have the meaning set forth in Section
24(a).
(t) "Expiration Date" shall have the meaning set forth in Section
7(a).
(u) "Final Expiration Date" shall mean the close of business on June
11, 2006.
(v) "Original Rights" shall have the meaning set forth in Section
1(g)(i)(B)(3).
(w) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior
to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board who are Continuing Directors, who
are not officers of the Company and who are not Acquiring Persons or
Affiliates, Associates, nominees or representatives of an Acquiring Person,
to be adequate (taking into account all factors that such directors deem
relevant including, without limitation, prices that could reasonably be
achieved if the Company or its assets were sold on an orderly basis
designed to realize maximum value) and otherwise in the best interests of
the Company and its shareholders (other than the Person or any Affiliate or
Associate thereof on whose behalf the offer is being made) taking into
account all factors that such directors may deem relevant.
(x) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
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(y) "Principal Party" shall have the meaning set forth in Section
13(b).
(z) "Purchase Price" shall have the meaning set forth in Section 4(a),
and shall initially be as set forth in Section 7(b).
(aa) "Record Date" shall have the meaning set forth in the recital
clause at the beginning of this Agreement.
(bb) "Redemption Price" shall have the meaning set forth in Section
23(a).
(cc) "Rights" shall have the meaning set forth in the recital clause
at the beginning of this Agreement.
(dd) "Rights Agent" shall have the meaning set forth in the preamble
clause at the beginning of this Agreement until a successor Rights Agent
shall have become such pursuant to the applicable provisions of this
Agreement, and thereafter "Rights Agent" shall mean such successor Rights
Agent. If at any time there is more than one Person appointed by the
Company as Rights Agent pursuant to the provisions of this Agreement,
"Rights Agent" shall mean and include each such Person.
(ee) "Rights Certificates" shall have the meaning set forth in Section
3(a).
(ff) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recital clause at the beginning of this Agreement.
(gg) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B).
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii).
(ii) "Section 13 Event" shall mean any event described in clauses (i),
(ii) or (iii) of Section 13(a).
(jj) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(kk) "Stock Acquisition Date" shall mean the date of first public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(ll) "Subsidiary" shall mean, with reference to any Person, any other
Person of which at least a majority of the voting power of the voting
equity securities or equity interests is beneficially owned, directly or
indirectly, or otherwise controlled by such first-mentioned Person.
(mm) "Substitute Consideration" shall have the meaning set forth in
Section 11(a)(iii).
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(nn) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(oo) "Trading Day" shall have the meaning set forth in Section 11(d).
(pp) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such additional co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the first to occur of:
(i) the close of business on the tenth Business Day after the
Stock Acquisition Date (or, if the tenth Business Day after the Stock
Acquisition Date occurs before the Record Date, the close of business on
the Record Date),
(ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Board, acting by a majority of the
Continuing Directors, prior to such time as any Person has become an
Acquiring Person) after the date that a tender or exchange offer (other
than a Permitted Offer) by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-
2(a) of the General Rules and Regulations under the Exchange Act (or any
comparable or successor rule), if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the Common Shares then
outstanding, or
(iii) the close of business on the tenth Business Day after a
determination, pursuant to Section 11(a)(ii)(B), that a Person is an
Adverse Person,
(the first to occur of (i), (ii), and (iii) being herein referred to as the
"Distribution Date"), (A) the Rights will be evidenced (subject to the
provisions of Section 3(b)) by the certificates for the Common Shares
registered in the names of the holders thereof (which certificates for
Common Shares shall be deemed also to be certificates for Rights) and not
by separate certificates and (B) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares (including a
transfer to the Company). As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of
the Company, one or more Rights certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
Common Share so held, subject to adjustment as provided
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herein. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights Agreement, in substantially the
form attached hereto as Exhibit B, by first-class, postage prepaid mail, to
each record holder of Common Shares as of the close of business on the
Record Date at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Shares outstanding as
of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Shares and the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing Common
Shares in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such Common Shares.
Certificates issued after the Record Date upon the transfer of Common
Shares outstanding on the Record Date shall bear the legend set forth in
Section 3(c).
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Rights shall also be issued to the extent
provided in Section 22 in respect of all Common Shares which are issued
after the Distribution Date and prior to the Expiration Date. Certificates
representing Common Shares (including, without limitation, certificates
issued upon transfer or exchange of Common Shares) issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date shall also be deemed to be certificates for the associated Rights, and
shall bear the following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Bio-
Vascular, Inc. (the "Company") and American Stock Transfer & Trust
Company (the "Rights Agent") dated as of June 12, 1996 (the "Rights
Agreement"), and as the same may be amended from time to time, the
terms of which (including restrictions on the transfer of such Rights)
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge after receipt of a written request therefor
from such holder. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was
or becomes an Acquiring Person, an Adverse Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement)
and any subsequent holder of such Rights, whether currently held by or
on behalf of such Person or any subsequent holder, may become null and
void."
Until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the Common Shares represented by certificates for
Common Shares shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of the
associated Rights, and the transfer of any of such certificates shall also
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constitute the transfer of the Rights associated with such Common Shares,
whether or not containing the foregoing legend. In the event that the
Company purchases or acquires and cancels any Common Shares after the
Record Date but prior to the earlier of the Distribution Date or the
Expiration Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares that are no longer
outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to exercise,
certification and assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange, national market system or over-the-counter market on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall entitle the holders thereof to
purchase such number of Common Shares as shall be set forth therein at the
price per Common Share set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights beneficially owned by a Person reasonably
believed by at least a majority of the Continuing Directors to be (i) an
Acquiring Person, an Adverse Person or any Associate or Affiliate of any
such Person, (ii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such, or (iii) a transferee of
an Acquiring Person or an Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person or Adverse Person (or from any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person or
Adverse Person (or any such Associate or Affiliate) or to any Person with
whom such Acquiring Person or Adverse Person (or any such Associate or
Affiliate) has any continuing oral or written plan, agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer which
at least a majority of the Continuing Directors has determined is part of
an oral or written plan, arrangement or understanding that has as a primary
purpose or effect avoidance of Section 7(e), and any Rights Certificate
issued to any such Person pursuant Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend, modified as applicable to such Person:
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"The Rights represented by this Rights Certificate are or were
beneficially owned by a person who was or became an [Acquiring]
[Adverse] Person or an Affiliate or Associate of an [Acquiring]
[Adverse] Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section
7(e) of such Agreement."
The provisions of Sections 7(e) of this Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its President and Chief Executive Officer or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof, which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any
Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall
be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated by the Rights Agent as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the date of each
of the Rights Certificates and whether each such Rights Certificate
contains a legend as set forth in Section 4(b).
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e), Section
14 and Section 20(k), at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
Common Shares (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing
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delivered to the Rights Agent, and shall surrender the Rights Certificate
or Certificates to be transferred, split up, combined or exchanged, with
the form of assignment and certificate appropriately executed, at the
office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have duly completed and executed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14
and Section 20(k), countersign and deliver to each Person entitled thereto
a Rights Certificate or Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any transfer
tax or charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's or the Rights Agent's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date.
(a) Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
23(a)) in whole or in part, at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to exercise
and the certificate on the reverse side thereof duly completed and
executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for
the total number of Common Shares (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the first to occur of: (i) the Final Expiration
Date; (ii) the time at which such Rights expire as provided in Section
13(d); (iii) the time at which such Rights are redeemed as provided in
Section 23; or (iv) the time at which such Rights are exchanged as provided
in Section 24 (the first to occur of (i), (ii), (iii) and (iv) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one-tenth of a Common Share
purchasable pursuant to the exercise of a Right shall initially be $6.00,
shall be subject to adjustment from time to time as provided in Section 11
and Section 13(a) and shall be payable in accordance with Section 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise and certificate on the
reverse side thereof duly completed and
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executed, accompanied by payment of the Purchase Price for the number of
Common Shares (or other securities, cash or other assets, as the case may
be) to be purchased and an amount equal to any applicable transfer tax or
charge, the Rights Agent shall, subject to Section 14(b) and Section 20(k),
thereupon promptly (i) requisition from any transfer agent of the Common
Shares (or make available, if the Rights Agent is the transfer agent for
such Common Shares) certificates for the total number of Common Shares to
be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14, (iii) promptly after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) promptly after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii)) may be made by
cash, certified bank check or money order payable to the order of the
Company. If the Company determines to issue other securities of the
Company, pay cash and/or distribute other assets pursuant to Section
11(a)(iii), the Company will make all arrangements necessary so that such
other securities, cash and/or other assets are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
that are or were beneficially owned by (i) an Acquiring Person, an Adverse
Person or any Associate or Affiliate of any such Person, (ii) a transferee
of an Acquiring Person or an Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or Adverse
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person (or from any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person or Adverse Person (or any such
Associate or Affiliate) or to any Person with whom the Acquiring Person or
Adverse Person (or any such Associate or Affiliate) has any continuing oral
or written plan, agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which at least a majority of the
Continuing Directors has determined is part of an oral or written plan,
agreement, arrangement or understanding that has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void
without any further action and any holder of such Rights shall have no
rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
are complied with, but shall have no liability to any holder of a Rights
Certificate or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or Adverse Person or any
of their respective Affiliates, Associates or transferees hereunder.
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(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported transfer or exercise as set forth in this Section 7 unless such
registered holder shall have (i) duly completed and executed the
certificate following the form of assignment or election to exercise set
forth on the reverse side of the Rights Certificate surrendered for such
assignment or exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates in accordance with the rules and
regulations of the Securities and Exchange Commission, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares; Registration.
(a) The Company shall at all times prior to the Expiration Date cause
to be reserved and kept available, out of its authorized and unissued
Common Shares, the number of Common Shares that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all
outstanding Rights. Upon the occurrence of any events resulting in an
increase in the aggregate number of Common Shares (or other equity
securities of the Company) issuable upon exercise of all outstanding Rights
above the number then reserved, the Company shall make appropriate
increases in the number of shares so reserved.
(b) If the Common Shares (or other securities, if applicable) issuable
and deliverable upon the exercise of the Rights are listed or admitted for
trading on any national securities exchange or included for quotation on
any national market system, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares and other securities reserved for such issuance to be listed or
admitted for trading on such national securities exchange or included for
quotation on any such national market system upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by
the Company upon exercise of the Rights has been determined pursuant to
this Agreement, including in accordance with Section 11(a)(iii), or as soon
as is required by law following the Distribution Date, as the case may be,
a registration statement or statements under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form or forms, (ii) cause such registration statement or
statements to become effective as soon as practicable
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<PAGE>
after such filing, and (iii) cause such registration statement or
statements to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities or (B) the Expiration
Date. The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the
various states. The Company may temporarily suspend, for a period of time
not to exceed 90 days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement or statements and permit it or
them to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualifications in such
jurisdiction, if any, shall have been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares (or other securities,
if applicable) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject
to payment of the Purchase Price), be duly and validly authorized and
issued and, with respect to Common Shares or other shares of capital stock,
fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for Common Shares (or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required (i) to pay any transfer tax or charge that
may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a
number of Common Shares (or other securities, as the case may be) in
respect of a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or (ii) to issue or
deliver any certificates for a number of Common Shares (or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax or charge shall have
been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is
due.
Section 10. Common Shares Record Date. Each Person in whose name any
certificate for a number of Common Shares (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of such Common Shares (or other securities, as
the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer taxes
or charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the applicable transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (or other securities, as the case may be), fractional or otherwise, on,
and such certificate shall be dated, the next succeeding Business Day on which
the applicable transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a
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shareholder of the Company with respect to shares (or other securities, as the
case may be) for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares or other
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11:
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the outstanding Common Shares
payable in Common Shares; (B) subdivide or split the outstanding Common
Shares, (C) combine or consolidate the outstanding Common Shares into a
smaller number of shares or effect a reverse stock split of the outstanding
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, split, combination, consolidation or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to such date and
at a time when the Company's transfer books for the Common Shares were
open, he would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, split, combination, consolidation
or reclassification. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event:
(A) Any Person shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is a transaction set forth in Section
13(a), or
(B) the Board shall declare any Person to be an Adverse
Person, upon a determination by at least a majority of the Continuing
Directors, that such Person, alone or together with its Affiliates or
Associates, has, at any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of a substantial amount of Common Shares (which
amount shall in no event be less than 10% of the Common Shares then
outstanding) and a determination by at least a majority of the Continuing
Directors, after reasonable inquiry and investigation, including
consultation with such Persons as such directors shall deem appropriate,
that (1) such Beneficial Ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person
or to cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such Person or
its Affiliates or Associates with short-term financial gain under
circumstances where at least a majority of the Continuing Directors
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determines that the best long-term interests of the Company and its
shareholders would not be served by taking such action or entering into
such transaction or series of transactions at that time or (2) such
Beneficial Ownership is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of relationships
with customers or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the Company,
then, promptly following the first occurrence of a Section 11(a)(ii) Event,
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e)) shall thereafter have the right to
receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by ten times the number of tenths of a Common
Share for which a Right is then exercisable, in accordance with the terms
of this Agreement, in lieu of the number of one-tenth Common Shares for
which such Right was exercisable immediately prior to the occurrence of
such Section 11(a)(ii) Event, such number of whole Common Shares as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by ten times the number of tenths of a Common Share for which such
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right for all purposes of this Agreement) by 50% of the
Current Market Price per Common Share (determined pursuant to Section
11(d)) on the date of such first occurrence (such number of whole Common
Shares, the "Adjustment Shares").
(iii) In the event that the number of Common Shares that are
authorized by the Company's Articles of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of all of the
exercisable Rights in accordance with Section 11(a)(ii), the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the Purchase
Price (such excess, the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Shares and/or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred
stock of the Company with rights, privileges and other terms substantially
the same as the Common Shares (such shares of preferred stock are referred
to herein as "Equivalent Preferred Stock")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing
(whichever substituted, the "Substitute Consideration"), having an
aggregate value equal to the Current Value, where such aggregate value has
been determined by at least a majority of the Continuing Directors based
upon the advice of an investment banking firm selected by at least a
majority of the Continuing Directors; provided, however, if the Company
shall not have made adequate provision to deliver substitute consideration
pursuant to clause (B) above within 30 days following the later of (x) the
date of the occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, Common Shares to the extent available and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If at least a majority of the Continuing Directors shall
determine in good faith that it is likely that sufficient additional Common
Shares could
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be authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company (xx)
shall provide, subject to Section 7(e), that such action shall apply
uniformly to all outstanding Rights, and (yy) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any
such suspension, the Company shall give notice to the Rights Agent and
either advise in writing all shareholders of record as of that date or
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a notice to the Rights Agent and
either a written notice to all shareholders of record or a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), (xxx) the value of the Common Shares
shall be the Current Market Price (as determined pursuant to Section 11(d))
per Common Share on the Section 11(a)(ii) Trigger Date, and (yyy) the value
of any "Equivalent Preferred Stock" shall be deemed to have the same value
as a Common Share on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling them
to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Common Shares (or securities convertible into
Common Shares) at a price per Common Share (or having a conversion price
per Common Share, if a security convertible into Common Shares) less than
the Current Market Price (as determined pursuant to Section 11(d)) per
Common Share on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of Common Shares outstanding on such record
date, plus the number of Common Shares which the aggregate offering price
of the total number of Common Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase, at such Current Market Price, and the denominator of which
shall be the number of Common Shares outstanding on such record date, plus
the number of additional Common Shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration part or all of which may in a form other than
cash, the value of such consideration shall be as determined in good faith
by at least a majority of the Continuing Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Common Shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments
shall be made successively whenever such a record date is fixed, and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Common Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences
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of indebtedness, cash (other than a regular quarterly dividend out of the
earnings or retained earnings of the Company), assets (other than a regular
quarterly dividend referred to above or a dividend payable in Common
Shares, but including any dividend payable in stock other than Common
Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be
the Current Market Price (as determined pursuant to Section 11(d)) per
Common Share on such record date, less the fair market value (as determined
in good faith by at least a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed on, or of such subscription rights or warrants applicable
to, one Common Share, and the denominator of which shall be such Current
Market Price. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "Current Market
Price" per Common Share on any date shall be deemed to be the average of
the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made pursuant to
Section 11(a)(iii), the "Current Market Price" per Common Share on any date
shall be deemed to be the average of the daily closing prices per share of
such Common Shares for the 10 consecutive Trading Days immediately
following such date; provided, however, that in the event that such Current
Market Price is determined during a period following the announcement by
the issuer of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible into
such Common Shares (other than the Rights), or (B) any subdivision, split,
combination or reclassification of such Common Shares, and prior to the
expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, split, combination or
reclassification, then, and in each such case, the "Current Market Price"
shall be properly adjusted to take into account ex-dividend trading. The
closing price for each Trading Day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last sale price or, if not reported, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq System or such other system then in use, or, if on any such date the
Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Continuing Directors.
If on any such date no market maker is making a market in the Common
Shares, the "Current Market Price" per share shall mean the fair value per
share as determined in good faith by at least a majority of the Continuing
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal
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national securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day.
(e) Anything herein to the contrary notwithstanding, except the last
sentence of this Section 11(e), no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandths of a Common Share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
which would be required by this Section 11, but for the first sentence of
this Section 11(e), shall be made no later than the earlier of (i) three
years from the date of the transaction or event which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Common Shares, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k)
and (m), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Common Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of Common Shares (calculated to the nearest ten-thousandth of a Common
Share) obtained by (i) multiplying (A) the number of Common Shares covered
by a Right immediately prior to such adjustment, by (B) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company, acting by the decision of at least a majority of the
Continuing Directors, may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Common Shares issuable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment in the number
of Rights shall be exercisable for the number of Common Shares for which a
Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately
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prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least 10 Business Days
later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of rights pursuant to
this Section 11(i), the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear,
at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the Common Shares issuable
upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable Common
Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of the number of Common Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the number of Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
or securities (fractional or otherwise) upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their sole discretion a majority of the Continuing
Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance wholly for
cash of any Common Shares at less than the Current Market Price per Common
Share, (iii)
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<PAGE>
issuance wholly for cash of securities which by their terms are convertible
into or exchangeable for Common Shares, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Common Shares shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any Person (other than a
Subsidiary of the Company in a transaction that complies with Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in
one transaction, or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)), if (A) at the
time of or immediately after such consolidation, merger, sale or transfer
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or
(B) prior to, simultaneously with or immediately after such consolidation,
merger, sale or transfer, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section
27, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights, unless such action is approved by a majority of the
Continuing Directors.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Shares,
a copy of such certificate, and (c) mail a brief summary thereof to each holder
of a Rights Certificate (or, if prior to the Distribution Date, to each holder
of a certificate representing Common Shares) in accordance with Section 26. The
Rights Agent shall be fully authorized to rely and be protected in relying on
any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly,
(i) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
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(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o)) shall consolidate with, or
merge with or into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding Common
Shares held by existing shareholders of the Company shall be changed into
or exchanged for stock or other securities of any Person (including the
Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets, or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o)),
then, and in each such case, except as contemplated by Section 13(d),
proper provision shall be made so that: (A) each holder of a Right, except
as otherwise provided herein, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price multiplied by
ten times the number of tenths of a Common Share for which a Right is then
exercisable, in accordance with the terms of this Agreement, in lieu of the
number of one-tenth Common Shares for which such Right was exercisable
immediately prior to the occurrence of such Section 13 Event, such number
of whole validly authorized and issued, fully paid, non-assessable and
freely tradeable Common Shares of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by ten times the number of
tenths of a Common Share for which a Right was exercisable immediately
prior to the occurrence of such Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the first occurrence of a Section 13
Event, multiplying a number equal to ten times the number of tenths of a
Common Share for which such Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such occurrence), and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right for all purposes of this
Agreement) by 50% of the Current Market Price per whole Common Share
(determined pursuant to Section 11(d)) of such Principal Party on the day
of consummation of such Section 13 Event; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to its Common Shares thereafter deliverable upon the exercise of the
Rights; and (E) the provisions of Section 11(a)(ii) shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in Section 13(a)(i) or (ii), the Person that is the issuer of any
securities into which Common
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Shares are converted in such merger or consolidation, and if no securities
are so issued, the Person that is the other party to such merger or
consolidation, and (ii) in the case of any transaction described in Section
13(a)(iii), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (A) if the Common
Shares of such Person are not at such time and have not been continuously
over the preceding 12 month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; and (B) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value.
(c) (i) The Company shall not consummate any such transaction
constituting a Section 13 Event unless the Principal Party shall have a
sufficient number of authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in Section 13(a)
and (b) and further providing that, as soon as practicable after the date
of consummation of any transaction constituting a Section 13 Event, the
Principal Party will (A) prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (1) become effective as
soon as practicable after such filing and (2) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and (B) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
that comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(ii) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in
subparagraphs (i) and (ii) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to
a Permitted Offer (or a wholly owned Subsidiary of any such Person or
Persons); (ii) the price per Common Share offered in such transaction is
not less than the price per Common Share paid to all holders of Common
Shares whose shares were purchased pursuant to such Permitted Offer, and
(iii) the form of consideration offered in such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
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Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates that evidence fractional Rights. The
Company may, in lieu of such fractional Rights, pay to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are
not listed or admitted to trading on any national securities exchange, the
last sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq
System or such other system then in use or, if on any such day the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Rights selected by at least a majority of the Continuing Directors. If
on any such day no such market maker is making a market in the Rights, the
fair value of the Rights on such date shall be as determined in good faith
by at least a majority of the Continuing Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Common
Shares or other capital stock upon exercise of the Rights or to distribute
certificates that evidence fractional shares. The Company may, in lieu of
such fractional shares, pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value per
whole Common Share. For purposes of this Section 14(b), the current market
value per whole Common Share or other capital stock shall be the closing
price of one whole Common Share or other share of capital stock (as
determined in accordance with Section 11(d)) for the Trading Day
immediately prior to the date of such exercise.
(c) Every holder of a Right, by the acceptance of the Right,
expressly waives his right to receive any fractional Rights or any
fractional Common Shares upon exercise of a Right, except as permitted by
this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
associated Common Share certificate). Any registered holder of any Rights
Certificate (or, prior to the Distribution Date, the associated Common Share
certificate), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, the associated
Common Share certificate), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights in the manner provided in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
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adequate remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Shares;
(b) on or after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of transfer and with
the appropriate forms and certificates duly completed and fully executed
and otherwise complying with any other requirements set forth in this
Agreement;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificate or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e), shall be required to be
affected by any notice or knowledge to the contrary; and
(d) Notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Board and the Rights Agent shall not have any
liability to any holder of a Right or other Person as a result of the
inability of the Company or the Rights Agent to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Common Shares or any other securities
of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
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Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability
or expense incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance, administration and execution of
this Agreement and the exercise and performance of its duties hereunder,
including without limitation the costs and expenses of defending against
and appealing any such claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that such
Person would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates
(or, prior to the Distribution Date, the associated Common Share certificates),
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
advice.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President and Chief Executive
Officer, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and any such certificate shall be full and complete
authorization and protection to the Rights Agent for any action taken,
suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall not be liable or responsible hereunder
except for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11, Section 13 or Section 24 or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of a certificate delivered pursuant to
Section 12 describing any such adjustment); nor shall it be deemed to make
any representation or warranty as to the authorization or reservation of
any Common Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares will, when so issued, be
validly authorized and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other
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acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions or direction with respect to the performance of its duties
hereunder from the President and Chief Executive Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company, and to apply to such officers for
advice, instructions or direction in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions or direction of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent or any shareholder, director, officer or employee of the
Rights Agent from acting in any other capacity for the Company or for any
other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
liable or responsible for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss or damages to the Company
resulting from any such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights or powers if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to exercise, as the case may be, has
either not been duly completed and executed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer until it
has received instructions with respect thereto from the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Shares the existence of which the Rights Agent has received
notice from the Company, by registered or certified mail, and to the registered
holders of the Rights Certificates (or, prior to the Distribution Date, the
associated Common Share certificates) by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares, by registered or certified
mail, and to the registered holders of the Rights Certificates (or, prior to the
Distribution Date, the associated Common Share certificates) by first-class
mail. If the Rights
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<PAGE>
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the registered
holder of a Rights Certificate (or, prior to the Distribution Date, the
associated Common Share certificates) who shall, with such notice, submit his
Rights Certificate (or, prior to the Distribution Date, the associated Common
Share certificates) for inspection by the Company, then the registered holder
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be a corporation organized and doing business under the
laws of the United States, the State of Minnesota or the State of New York (or
of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of Minnesota or
the State of New York) in good standing, having an office in the State of
Minnesota or the State of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $5 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for such purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Rights Certificates
(or, prior to the Distribution Date, the associated Common Share certificates).
Failure to give any notice provided for in this Section 21 or to appoint a
successor Rights Agent, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, but subject
to Section 7(e), the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be specified by at least a majority of the
Continuing Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the Expiration Date,
the Company (a) shall, with respect to Common Shares so issued or sold pursuant
to the exercise of stock options, grants or awards outstanding as of the
Distribution Date under any benefit plan or arrangement for employees or
directors, or upon the exercise, conversion or exchange of securities issued by
the Company prior to the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by at least a majority of the Continuing
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance could create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of issuance thereof.
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Section 23. Redemption and Termination.
(a) The Board, acting by at least a majority of the Continuing
Directors, may, at its option, at any time prior to the first to occur of
the close of business on (i) the tenth Business Day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the tenth Business Day
following the Record Date), (ii) the tenth Business Day after a
determination, pursuant to Section 11(a)(ii)(B), that a person is an
Adverse Person, or (iii) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price") and the Company may, at its option, pay the Redemption
Price in Common Shares (based on the "Current Market Price," as defined in
Section 11(d), of the Common Shares at the time of redemption), cash or any
other form of consideration deemed appropriate by the Board, acting by a
majority of the Continuing Directors. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired. The Company shall
promptly notify the Rights Agent following the action of the Board ordering
redemption of the Rights.
(b) Immediately upon the action of the Board ordering the redemption
of the Rights pursuant to this Section 23, and without any further action
and without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the registered holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent for the Common Shares; provided, however, the failure to give or any
defect in any such notice shall not affect the validity of such redemption.
Any notice which is mailed in the manner provided in Section 26 shall be
deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Exchange.
(a) The Board, acting by at least a majority of the Continuing
Directors, may, at its option, at any time after a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions
of Section 7(e)) for Common Shares, with each Right to be exchanged for
such number of Common Shares as shall equal the result obtained by dividing
(x) a number equal to ten times the Purchase Price by (y) the Current
Market Price per Common Share (determined pursuant to Section 11(d)) (such
number of shares being hereinafter referred to as the "Exchange Ratio")).
The Exchange Ratio shall be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction affecting the Common Shares
that occurs after a Section 11(a)(ii) Event. Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time after
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an Acquiring Person becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to Section 24(a) and without any further action and
without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly
notify the Rights Agent and give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner provided in Section 26
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of outstanding and
exercisable Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Equivalent Preferred Stock for Common Shares
exchangeable for Rights.
(d) In the event that there shall not be sufficient Common Shares or
Equivalent Preferred Stock issued but not outstanding or authorized but
unissued and unreserved to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional Common Shares or Equivalent
Preferred Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to
the registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the Current Market Value of a whole Common
Share, as determined pursuant to the second sentence of Section 11(d), for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class
(other than the Common Shares) to the holders of Common Shares or to make
any other distribution to the holders of Common Shares (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), (ii) to offer to the holders of Common Shares rights or warrants
to subscribe for or to purchase any additional Common Shares or shares of
stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of the Common Shares (other than a
reclassification involving only the subdivision of outstanding Common
Shares), (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer),
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in one transaction or a series of related transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons (other than (x) the Company and/or
any of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) or (y) a merger in which the Company is the surviving
corporation and no vote of shareholders of the Company is required to
consummate the merger), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give
to each registered holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of Common Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by
Section 25(a)(i) or (ii) at least ten Business Days prior to the record
date for determining holders of Common Shares for purposes of such action,
and in the case of any such other action, at least ten Business Days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Shares, whichever shall be
the earlier.
(b) In case any Triggering Events shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to each registered
holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii) or Section 13.
Section 26. Notices.
(a) Notices, communications or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Bio-Vascular, Inc.
2575 University Avenue
St. Paul, Minnesota 55114
Attention: President and Chief Executive Officer
with a copy to:
Oppenheimer Wolff & Donnelly
Plaza VII, Suite 3400
45 South Seventh Street
Minneapolis, Minnesota 55402
Attn: Bruce A. Machmeier
(b) Subject to the provisions of Section 21, notices, communications
or demands authorized by this Agreement to be given or made by the Company
or by the holder of any
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Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(c) Notices, communications or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, prior to the Distribution Date, the associated
Common Share certificate) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Company maintained by
the Company, the Rights Agent or the transfer agent for the Common Shares,
as appropriate.
Section 27. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company may
(acting by at least a majority of the Continuing Directors), and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement, including without limitation to modify or amend the definition
of Acquiring Person set forth in Section 1(a) hereof and to change the Purchase
Price set forth in Section 4(a) and Section 7(b) hereof, without the approval of
any holders of certificates representing Common Shares and without the approval
of any holders of Rights or holders of certificates representing Rights. From
and after the Distribution Date and subject to the penultimate sentence of this
Section 27, the Company may (acting by at least a majority of the Continuing
Directors), and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (a) to cure any ambiguity herein, (b) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, (c) to shorten or lengthen any time period hereunder, or (d)
to otherwise change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person);
provided, however, that this Agreement may not be supplemented or amended to
lengthen (i) a time period relating to when the rights may be redeemed at such
time as the Rights are not then redeemable, or (ii) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person). Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained in this Agreement
to the contrary, no supplement or amendment shall be made which changes the
Redemption Price, the Final Expiration Date or the number of Common Shares for
which a Right is exercisable. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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Section 29. Determinations and Actions by the Board. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3d(d)(1)(i) of the General Rules and Regulations under the Exchange Act,
whether or not the Common Shares are registered under the Exchange Act. The
Board (where specifically provided for herein, acting by at least a majority of
the Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (where specifically provided for herein, acting by at least
a majority of the Continuing Directors) or to the Company (where specifically
provided for herein, acting by at least a majority of the Continuing Directors),
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (a) interpret the
provisions of this Agreement, and (b) make all calculations and determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend or
supplement this Agreement). All such actions, calculations, interpretations and
determinations (including for purposes of clause (ii) below, all omissions with
respect to the foregoing) which are done or made by the Board (where
specifically provided for herein, acting by at least a majority of the
Continuing Directors) in good faith shall (i) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (ii) not subject the Board or any director to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the associated Common Share certificates) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the associated Common Share certificates).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable for any purpose or under any set
of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons, and the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement or the Rights
to the contrary, if any such term, provision, covenant or restriction is held by
such court or authority to be invalid, void or unenforceable and at least a
majority of the Continuing Directors determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the
purpose of effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the close of
business on the tenth Business Day following the date of such determination by
such Continuing Directors. Without limiting the foregoing, if any provisions
requiring that a determination be made by less than the entire Board (or at a
time or with the concurrence of a group of directors consisting of less than the
entire Board) is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, such determination shall then be made by the
Board in accordance with applicable law and the Company's Articles of
Incorporation and Bylaws.
-33-
<PAGE>
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the Sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: BIO-VASCULAR, INC.
By: /s/ M. Karen Gilles By: /s/ John T. Karcanes
---------------------------- ------------------------------------
Name: M. Karen Gilles Name: John T. Karcanes
Title: Vice President of Title: President and Chief Executive
Finance and Chief Financial Officer
Officer
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Susan Silber By: /s/ Herbert J. Lemmer
---------------------------- ------------------------------------
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
-34-
<PAGE>
Exhibit A
---------
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER JUNE 11, 2006 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR AN ADVERSE 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] [ADVERSE] PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN [ACQUIRING] [ADVERSE] PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] THE RIGHTS SHALL NOT BE
EXERCISABLE AND SHALL BE VOID SO LONG AS HELD BY A HOLDER IN ANY JURISDICTION
WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE
EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN
OBTAINED OR BE OBTAINABLE.*
- ----------------
*The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person or an Adverse Person, as
applicable, and shall replace the preceding sentence.
<PAGE>
BIO-VASCULAR, INC.
------------------
RIGHTS CERTIFICATE
------------------
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 12, 1996 (the "Rights Agreement"), between Bio-
Vascular, Inc., a Minnesota corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m. (Minneapolis,
Minnesota time) on June 11, 2006 at the office of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one-tenth of one fully paid
and non-assessable share of the Company's Common Stock, par value $.01 per share
(the "Common Shares"), at a purchase price (the "Purchase Price") of $6.00 per
one-tenth of a Common Share, upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
completed and executed. The Purchase Price may be paid by cash, certified bank
check or money order payable to the order of the Company. The number of Rights
evidenced by this Rights Certificate (and the number of Common Shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of the close of business on
July 15, 1996, based on the Common Shares as constituted at such date.
Capitalized terms used herein without definition shall have the meaning
given to them in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person, (ii) a
transferee of any such Acquiring Person, Adverse Person, Associate or Affiliate,
or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Common Shares or other securities which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events. In certain circumstances and as described in the Rights
Agreement, cash, property or other securities may be issued by the Company upon
the exercise hereof in lieu of Common Shares.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth
2
<PAGE>
in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal offices of the Company and the above-mentioned office of the Rights
Agent and are also available upon written request to the Company.
Subject to the provisions of the Rights Agreement, this Rights Certificate,
with or without other Rights Certificates, upon surrender at the office or
offices of the Rights Agent designated for such purpose, with the Form of
Election and Certificate set forth on the reverse side duly executed, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed, subject to the approval of at least a majority
of the Continuing Directors, at a redemption price of $.001 per Right at any
time prior to the earlier of the close of business on (i) the tenth Business Day
following the Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement), (ii) the tenth Business Day after a
determination that a Person is an Adverse Person, or (iii) the Final Expiration
Date.
Subject to the provisions of the Rights Agreement, the Company may, at its
option, at any time after a Section 11(a)(ii) Event, subject to the approval of
at least a majority of the Continuing Directors, exchange all or part of the
Rights evidenced by this Certificate for Common Shares or shares of a series of
preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby if in lieu thereof a cash payment is made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
3
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company.
Dated: __________________
ATTEST: BIO-VASCULAR, INC.
___________________________ By: _____________________________________
Title: __________________________________
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: _____________________________
Authorized Officer
4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ___________________ ________________________________________
Signature
Signature Guaranteed:
The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMP") or New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
5
<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, an
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person.
Date: ___________________ ________________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
6
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: BIO-VASCULAR, INC.
The undersigned irrevocably hereby elects to exercise_________Rights
represented by this Rights Certificate to purchase the Common Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of and
delivered to:
Please insert social security
or other identifying number_____________________________________________
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number_____________________________________________
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
Dated:___________ ____________________
Signature
Signature Guaranteed:
The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMP") or New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
7
<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person,
an Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person.
Date:___________ ____________________
Signature
Signature Guaranteed:
NOTICES
-------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
8
<PAGE>
Exhibit B
---------
BIO-VASCULAR, INC.
SUMMARY OF RIGHTS AGREEMENT
---------------------------
On June 12, 1996, the Board of Directors of Bio-Vascular, Inc. (the
"Company") declared a dividend distribution of one common share purchase right
(a "Right") for each outstanding share of the Company's Common Stock, par value
$.01 per share (the "Common Shares"), payable to shareholders of record at the
close of business on July 15, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company at any time following the
Distribution Date (as defined below) one-tenth of a Common Share, or a
combination of securities and assets of equivalent value, at a purchase price of
$6.00 per one-tenth Common Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated as of June 12, 1996 between the Company and American
Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be evidenced, with respect to any of the Common
Share certificates outstanding as of the Record Date, by such Common Share
certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Shares and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Shares, other than
as a result of a Permitted Offer, as defined (the "Stock Acquisition Date");
(ii) the close of business on the tenth business day (or such later date as the
Board of Directors, acting by a majority of the Continuing Directors, may
determine) following the commencement of a tender offer or exchange offer (other
than a Permitted Offer, as defined) that would result in a person or group
beneficially owning 15% or more of the outstanding Common Shares; or (iii) the
close of business on the tenth business day after a determination by at least a
majority of the Continuing Directors that a Person is an Adverse Person, and
that such Person, alone or together with its affiliates and associates, has
become the beneficial owner of a substantial amount of Common Shares (which
amount shall in no event be less than 10% of the Common Shares then outstanding)
and (a) such beneficial ownership by such Person is intended to cause the
Company to repurchase the Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term financial
gain under circumstances where at least a majority of the Continuing Directors
determines that the best long-term interests of the Company and its shareholders
would not be served by taking such action or entering into such transaction or
series of transactions at that time or (b) such beneficial ownership is causing
or reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board who are Continuing Directors, who are not officers
of the Company and who are not Acquiring Persons or Affiliates, Associates,
<PAGE>
nominees or representatives of an Acquiring Person, to be adequate and otherwise
in the best interests of the Company and its shareholders (other than the Person
or any Affiliate or Associate thereof on whose behalf the offer is being made).
A "Continuing Director" is (i) any person who is a member of the Board of
Directors prior to June 12, 1996, while such person is a member of the Board of
Directors, who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative or designee of an
Acquiring Person or an Adverse Person or any such affiliate or associate, or
(ii) any person who subsequently becomes a member of the Board of Directors who
is not an Acquiring Person or an Adverse Person, or an affiliate or associate of
either of the foregoing, or a representative or designee of an Acquiring Person,
an Adverse Person or any such affiliate or associate, and whose nomination or
election to the Board of Directors is recommended or approved by a majority of
the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after July 15, 1996 will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificate for Common Shares outstanding will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 11, 2006, unless earlier redeemed or exchanged
by the Company as described below (the earliest of all such dates, the
"Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates will
be mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights. All Common Shares issued prior to the earlier of the
Distribution Date and the Expiration Date will be issued with Rights. Common
Shares issued after the Distribution Date upon the exercise of employee stock
options, issuances under other employee stock benefit plans or the conversion of
convertible securities issued prior to the Distribution Date will be issued with
Rights.
In the event (i) that a person or group, with certain exceptions, becomes
the beneficial owner of more than 15% of the then outstanding Common Shares,
other than as a result of a Permitted Offer or (ii) at least a majority of the
Continuing Directors determines that a person is an Adverse Person, then each
holder of a Right will thereafter have the right to receive, upon exercise for a
purchase price equal to ten times the Purchase Price of the Right, that number
of Common Shares (or in certain circumstances, cash, property or other
securities of the Company) having a market value equal to twenty times the
Purchase Price of the Right. The Rights, however, are not exercisable following
the occurrence of either of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
Notwithstanding any of the foregoing, following the occurrence of either of the
events set forth above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person (or certain related persons and transferees) will be
null and void. The events set forth in this paragraph are referred to as
"Section 11(a)(ii) Events."
For example, at a Purchase Price of $6.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following a Section 11(a)(ii) Event would entitle its holder to purchase $120
worth of Common Shares (or other consideration as noted above) for $6. If the
Common Shares had a per share value of $15 at such time, the holder of each
valid Right would be entitled to purchase eight Common Shares for $60.
<PAGE>
In the event that, at any time following the Stock Acquisition Date, other
than pursuant to a Permitted Offer, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the surviving
corporation or the Common Shares are changed or exchanged or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise thereof for a purchase price
equal to ten times the current Purchase Price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value equal to twenty times the Purchase Price of
the Right. The events set forth in this paragraph are referred to as "Section
13 Events," and the Section 11(a)(ii) Events and the Section 13 Events are
collectively referred to as the "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, at the
election of a majority of the Continuing Directors, the Company may exchange the
Rights (other than Rights which have become void), in whole or in part, for
Common Shares, with each Right to be exchanged for a number of Common Shares
equal to the result obtained by dividing (x) a number equal to ten times the
Purchase Price by (y) the current market price per Common Share (subject to
adjustment). In any such exchange, the Company, at its option, may substitute a
series of preferred stock of the Company with rights, privileges and other terms
substantially the same as the Common Shares.
The Purchase Price payable and the number of Common Shares issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, split,
combination, consolidation or reclassification of, the Common Shares, (ii) if
all holders of any security of the Company are granted rights, options or
warrants to subscribe for or purchase Common Shares or convertible securities at
less than the current market price of the Common Shares, or (iii) upon the
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company will not be required to issue fractional Common Shares, and,
in lieu of such fractional Common Shares, an adjustment in cash will be made
based on the market price of the Common Shares on the last trading date prior to
the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
redemption of the Rights, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or receive dividends. The creation of the Rights should not be taxable
to shareholders. Shareholders may, however, depending upon the circumstances,
recognize taxable income in the event that the rights become exercisable for
Common Shares (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.
3
<PAGE>
Any of the provisions of the Rights Agreement, including the definition of
Acquiring Person or the Purchase Price, may be amended by at least a majority of
the Continuing Directors prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by at least a
majority of the Continuing Directors in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or Adverse Person), or to
shorten or lengthen certain time periods under the Rights Agreement. However,
no amendment to adjust the time period governing redemption can be made at such
time as the Rights are not redeemable.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
4
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
BIO-VASCULAR, INC. ADOPTS
SHAREHOLDER RIGHTS PLAN
- -------------------------
ST. PAUL, Minn., June 19 -- Bio-Vascular, Inc. (Nasdaq:BVAS) announced
today that it has adopted a shareholder rights plan to protect the company and
its shareholders from unsolicited attempts or inequitable offers to acquire the
company. The rights plan has no immediate dilutive effect and does not diminish
the ability of the company or its shareholders to accept a fair offer for the
company.
To implement this shareholder rights plan, the company has declared a
dividend distribution of one common share purchase right on each outstanding
share of Bio-Vascular, Inc., common stock outstanding on July 15, 1996. Each
right will entitle shareholders to buy one-tenth of a share of the company's
common stock at an exercise price of $6.00. The rights will become exercisable
following the 10th business day after: (a) a person or group announces
acquisition of 15 percent or more of the company's common stock, (b) a person or
group announces commencement of a tender offer the consummation of which would
result in ownership by the person or group of 15 percent or more of the
company's common stock, or (c) the company's board of continuing directors
determines that a person is an "adverse person," as defined in the rights plan.
The company will be entitled to redeem the rights at $.001 per right
at certain times as provided in the rights agreement. The rights will expire on
June 11, 2006.
If, prior to redemption of the rights, a person or group acquires 15
percent or more of the company's common stock or is determined by a majority of
the company's "continuing directors" to be an "adverse person," then each right
not owned by such a 15 percent shareholder or adverse person will entitle its
holder to purchase, for $60 (10 times the rights current exercise price), shares
of the company's common stock having a then current market value of $120 (20
times the rights exercise price). In addition, if the company sells more than
50 percent of its assets or earning power or is acquired in a merger or other
business combination transaction in which it is not the surviving corporation,
the acquiring person must assume the obligations under the rights, which will
become exercisable to acquire common stock of the acquiring person at the
discounted price.
"This rights agreement is intended to protect our shareholders should
Bio-Vascular become the target of hostile or unfriendly takeover tactics," said
John T. Karcanes, president and chief executive officer. "It is designed to
assure that all
<PAGE>
shareholders of the company receive a fair price for their company shares in the
event of an acquisition of the company. It is also designed to make certain
that all Bio-Vascular shareholders receive full and fair treatment in the event
of an attempted takeover. The rights agreement was not adopted in response to
any specific effort to acquire control of the company and Bio-Vascular directors
are not aware of any such effort."
Bio-Vascular, Inc., based in St. Paul, develops, manufactures and
markets proprietary specialty medical products for use in thoracic, cardiac,
neuro and vascular surgery. Its Vital Images subsidiary is a leading developer
of 3-D volume rendering software for medical research, clinical diagnosis and
surgical planning.
06/19/96
