<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
RESPIRONICS, INC.
-----------------
(Exact name of registrant as specified in its charter)
DELAWARE 25-1304989
----------------------- -------------------
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
1001 Murry Ridge Drive
Murrysville, PA 15668
----------------------- -------------------
(Address of principal (Zip Code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
- --------------------------------------------------------------------------------
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
COMMON STOCK NONE
ACQUISITION RIGHTS
Exhibit Index on Page 7
Page 1 of 7 Pages
<PAGE>
Item 1. Description of Registrants Securities to Be Registered.
- ------ ------------------------------------------------------
Effective June 28, 1996 the Board of Directors of Respironics, Inc.
(the "Company") declared a distribution of one Right for each outstanding share
of Common Stock, par value $0.01 per share (the "Company Common Stock"), to
stockholders of record at the close of business on July 26, 1996 and for each
share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter and prior to the Distribution Date. Each
Right entitles the registered holder, subject to the terms of the Rights
Agreement, to purchase from the Company one one-hundredth of a share (a "Unit")
of Company Common Stock at a Purchase Price of $110 per Unit, subject to
adjustment. The Purchase Price is payable in cash or by certified or bank check
or money order payable to the order of the Company. The description and terms
of the Rights are set forth in a Rights Agreement between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agreement").
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or such Subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire or otherwise obtained beneficial ownership of 20%
or more of the then outstanding shares of Company Common Stock, and (ii) 10
business days (or such later date as may be determined by action of a majority
of the Independent Directors prior to such time as any person becomes an
Acquiring Person) following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 20% or more of the
then outstanding shares of Company Common Stock. Until the Distribution Date,
(i) the Rights will be evidenced by Company Common Stock certificates and will
be transferred with and only with such Company Common Stock certificates, (ii)
new Company Common Stock certificates issued after July 26, 1996 (also including
shares distributed from Treasury) will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock represented
by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
Page 2 of 7 Pages
<PAGE>
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 20% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% by means of a reverse stock split or
recapitalization), then, in each such case, each holder of a Right will
----
thereafter have the right to receive, upon payment of the Purchase Price, that
number of shares of Company Common Stock (or, in certain circumstances, Company
Common Stock, cash, property or other securities of the Company) with a value
equal to two times the Purchase Price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other Person or (iii) 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 described
above) shall thereafter have the right to receive, upon payment of the Purchase
Price, common stock of the Acquiring Person having a value equal to the two
times the Purchase Price.
The Purchase Price and the number of shares of Company Common Stock
issuable upon surrender of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Company Common Stock, (ii)
if holders of the Company Common Stock are granted certain rights or warrants to
subscribe for Company Common Stock or convertible securities at less than the
current market price of the Company Common Stock, or (iii) upon the distribution
to the holders of the Company Common Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
Page 3 of 7 Pages
<PAGE>
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Company
Common Stock prior to the date of exercise.
At any time until 10 business days following the Stock Acquisition
Date, a majority of the Independent Directors may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the "Redemption Price"), payable,
at the election of such majority of the Independent Directors, in cash or shares
of Company Common Stock. Immediately upon the action of a majority of
Independent Directors ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exchangeable for Company Common Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended at any
time prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to Shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
--------
governing redemption shall be made at such time as the Rights are not
redeemable.
The Rights may 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 a majority of the Independent Directors unless
the offer is conditioned on a substantial number of Rights being acquired.
However, the Rights should not interfere with any merger or other business
combination approved by a majority of the Independent Directors because the
Rights may be redeemed by the Company at $0.01 per Right at any time on or prior
to the tenth business day following the Stock Acquisition Date (subject to
extension by a majority of the Independent Directors). Thus, the Rights are
intended to encourage persons who may seek to acquire control of the Company to
initiate such an acquisition through negotiations with the Board of Directors.
However, the effect of the Rights may be to discourage a third party from making
a partial tender offer or otherwise attempting to obtain a substantial equity
position in the equity securities of, or seeking to obtain control
Page 4 of 7 Pages
<PAGE>
of, the Company. To the extent any potential acquirers are deterred by the
Rights, the Rights may have the effect of preserving incumbent management in
office.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the Form of
Rights Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit 1.
Item 2. Exhibits.
- ------ --------
1. Form of Rights Agreement, dated as of June 28, 1996, between
Respironics, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
which includes the Form of Rights Certificate as Exhibit A and the Summary of
Rights to Acquire Common Stock as Exhibit B. Pursuant to the Rights Agreement,
the Rights Certificates will not be mailed until after (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Company Common Stock or
(ii) 10 business days following the commencement of, or the announcement of the
intention to commence, a tender offer that would result in a person or group
beneficially owning 20% or more of the then outstanding shares of Company Common
Stock.
Page 5 of 7 Pages
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: June 28, 1996 RESPIRONICS, INC.
By: /s/ Daniel J. Bevevino
------------------------
Name: Daniel J. Bevevino
Title: Vice President and
Chief Financial Officer
Page 6 of 7 Pages
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
No. Description No.
- ------- -----
1 Form of Rights Agreement dated as of June 28, 7
1996, between Respironics, Inc. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent,
which includes the Form of Rights Certificate as
Exhibit A and the Summary of Rights to Acquire
Common Stock as Exhibit B.
Page 7 of 7 Pages
<PAGE>
EXHIBIT A to FORM 8-A
- --------------------------------------------------------------------------------
RIGHTS AGREEMENT
Dated as of June 28, 1996
- --------------------------------------------------------------------------------
RESPIRONICS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Certain Definitions............................. 1
SECTION 2. Appointment of Rights Agent..................... 5
SECTION 3. Issue of Rights Certificates.................... 6
SECTION 4. Form of Rights Certificates..................... 7
SECTION 5. Countersignature and Registration............... 8
SECTION 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates............................. 9
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights....................... 10
SECTION 8. Cancellation and Destruction of Rights
Certificates.................................... 12
SECTION 9. Reservation and Availability of Capital Stock... 13
SECTION 10. Company Common Stock Record Date................ 14
SECTION 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights.............. 15
SECTION 12. Certificate of Adjusted Purchase Price
or Number of Shares............................. 25
SECTION 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power...................... 25
SECTION 14. Fractional Rights and Fractional Shares......... 28
SECTION 15. Rights of Action................................ 29
SECTION 16. Agreement of Rights Holders..................... 30
SECTION 17. Rights Certificate Holder Not Deemed
a Shareholder................................... 31
SECTION 18. Concerning the Rights Agent..................... 31
SECTION 19. Merger or Consolidation or Change of
Name of Rights Agent............................ 31
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 20. Duties of Rights Agent.......................... 32
SECTION 21. Change of Rights Agent.......................... 35
SECTION 22. Issuance of New Rights Certificates............. 36
SECTION 23. Redemption and Termination...................... 36
SECTION 24. Notice of Certain Events........................ 37
SECTION 25. Notices......................................... 38
SECTION 26. Supplements and Amendments...................... 39
SECTION 27. Successors...................................... 39
SECTION 28. Determinations and Actions by the
Board of Directors, etc......................... 39
SECTION 29. Benefits of this Agreement...................... 40
SECTION 30. Severability.................................... 40
SECTION 31. Governing Law................................... 40
SECTION 32. Counterparts.................................... 41
SECTION 33. Descriptive Headings............................ 41
EXHIBIT A - Form of Rights Certificate
EXHIBIT B - Form of Summary of Rights
</TABLE>
ii
<PAGE>
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of June 28, 1996 (the "Agreement"), between
---------
RESPIRONICS, INC., a Delaware corporation (the "Company"), and CHASEMELLON
-------
SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
------------
WHEREAS, effective June 28, 1996 (the "Rights Dividend Declaration
---------------------------
Date"), the Board of Directors of the Company authorized and declared a
- ----
distribution of one Right for each share of Company Common Stock (as hereinafter
defined) outstanding at the Close of Business on July 26, 1996 (the "Record
------
Date"), and has authorized the issuance of one Right (as such number may
- ----
hereinafter be adjusted pursuant hereto) for each share of Company Common Stock
issued between the Record Date (whether originally issued or delivered from the
Company's treasury), and except as otherwise provided in Section 22, the
Distribution Date, each Right initially representing the right to purchase upon
the terms and subject to the conditions hereinafter set forth one one-hundredth
of a share of Company Common Stock (the "Rights");
------
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person (other than the Company, any
----------------
Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity and other than a Person who would be
entitled to report such Beneficial Ownership on Schedule 13G under Section
13(d) of the Exchange Act) which, upon the acquisition of additional shares
of Company Common Stock after the Rights Dividend Declaration Date, shall
become the Beneficial Owner of 20% or more of the shares of Company Common
Stock from time to time outstanding; provided, however, that the term
-------- --------
"Acquiring Person" shall not include an Exempt Person.
"Affiliate" and "Associate" shall have the respective meanings
--------- ---------
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
------------
as in effect on the date hereof; provided, the term "Associate" shall not
--------
include any Person who would be an Associate only as a result of clause (2)
of the definition of Associate contained in such Rule 12b-2.
<PAGE>
A Person shall be deemed the "Beneficial Owner" of, and shall be
----------------
deemed to "beneficially own", any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3
of the General Rules and Regulations under the Exchange Act (the
"Exchange Act Regulations") as in effect on the date hereof; provided,
------------------------- --------
however, that a Person shall not be deemed the "Beneficial Owner" of,
-------
or to "beneficially own", any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) 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 Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether
or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this paragraph (c)) or disposing of such
securities; or
(iii) 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 or upon the satisfaction of conditions) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that under this
-------- -------
paragraph (c) a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own", (A) securities tendered pursuant to a tender
or exchange offer made in accordance with Exchange Act Regulations by
such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or (C) securities that
may be issued 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
-2-
<PAGE>
or pursuant to Section 3(c) or Section 22 hereof (the "Original
--------
Rights") or pursuant to Section 11(i) hereof in connection with an
------
adjustment made with respect to any Original Rights.
"Business Day" shall mean any day other than a Saturday, Sunday or a
------------
day on which banking institutions in Pittsburgh, Pennsylvania are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M.,
-----------------
Pittsburgh, Pennsylvania time, on such date; provided, however, that if
-------- --------
such date is not a Business Day it shall mean 5:00 P.M., Pittsburgh,
Pennsylvania time, on the next succeeding Business Day.
"Common Stock" of any Person other than the Company shall mean the
------------
capital stock of such Person with the greatest voting power, or, if such
Person shall have no capital stock, the equity securities or other equity
interest having power to control or direct the management of such Person.
"common stock equivalents" has the meaning set forth in Section
------------------------
11(a)(iii).
"Company Common Stock" means the Common Stock, par value $.01, of the
--------------------
Company.
"current market price" has the meaning set forth in Section 11(d).
--------------------
"Current Value" has the meaning set forth in Section 11(a)(iii).
-------------
"Depositary Agent" has the meaning set forth in Section 7(c).
----------------
"Distribution Date" has the meaning set forth in Section 3(a).
-----------------
"Equivalent Company Common Stock" has the meaning set forth in Section
-------------------------------
11(b).
"Exempt Person" shall mean:
-------------
(i) the Company, any Subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any Subsidiary of the
Company, or any person or entity organized, appointed, established or
holding Company Common Stock for or pursuant to the terms of any such plan;
-3-
<PAGE>
(ii) any Person who would otherwise become an Acquiring Person solely
by virtue of a reduction in the number of outstanding shares of Company
Common Stock; provided, however, that such Person shall not be an Exempt
-------- -------
Person if, subsequent to such reduction, such Person shall become the
Beneficial Owner of any additional shares of Company Common Stock.
"Expiration Date" has the meaning set forth in Section 7(a).
---------------
"Final Expiration Date" has the meaning set forth in Section 7(a).
---------------------
"Independent Director" shall mean a member of the Board of Directors
--------------------
of the Company who is not an officer or employee of the Company, who is not
an Acquiring Person or an Exempt Person or an Affiliate or Associate of an
Acquiring Person or an Exempt Person or a representative or nominee of an
Acquiring Person or an Exempt Person or of any such Affiliate or Associate,
and who either (i) was a member of the Board of Directors of the Company
prior to the date hereof or (ii) subsequently became a director of the
Company and whose election or nomination for election is approved or
recommended by a vote of a majority of the Board of Directors of the
Company, which majority includes a majority of the Independent Directors
then on the Board of Directors.
"NASDAQ" has the meaning set forth in Section 11(d).
------
"Person" shall mean any individual, partnership, firm, corporation,
------
association, trust, unincorporated organization or other entity, as well as
any syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act.
"Principal Party" has the meaning set forth in Section 13(b).
---------------
"Purchase Price" has the meaning set forth in Section 7(b).
--------------
"Record Date" has the meaning set forth in the recital hereto.
-----------
"Redemption Price" has the meaning set forth in Section 23.
----------------
"Registered Common Stock" has the meaning set forth in Section 13(b).
-----------------------
"Registration Date" has the meaning set forth in Section 9(c).
-----------------
-4-
<PAGE>
"Registration Statements" has the meaning set forth in Section 9(c).
-----------------------
"Right" has the meaning set forth in the recital hereto.
-----
"Rights Certificate" has the meaning set forth in Section 3(a).
------------------
"Rights Dividend Declaration Date" has the meaning set forth in the
--------------------------------
recital hereto.
"Section 11(a)(ii) Event" shall mean any event described in Section
-----------------------
11(a)(ii)(A), (B) or (C) hereof.
"Section 11(a)(iii) Trigger Date" has the meaning set forth in Section
-------------------------------
11(a)(iii).
"Section 13 Event" shall mean any event described in clause (x), (y)
----------------
or (z) of Section 13(a) hereof.
"Securities Act" has the meaning set forth in Section 9(c).
--------------
"Spread" has the meaning set forth in Section 11(a)(iii).
------
"Stock Acquisition Date" shall mean the first date of public
----------------------
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
"Subsidiary" shall mean, with reference to any Person, any other
----------
Person of which an amount of voting securities or equity interests
sufficient to elect at least a majority of the directors or equivalent
governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such first-mentioned
Person.
"Summary of Rights" has the meaning set forth in Section 3(b).
-----------------
"Trading Day" has the meaning set forth in Section 11(d).
-----------
"Triggering Event" shall mean any Section 11(a)(ii) Event or any
----------------
Section 13 Event.
"Unit" has the meaning set forth in Section 7(b).
----
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company
-5-
<PAGE>
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. With the consent of the Rights Agent, the Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
SECTION 3. Issue of Rights Certificates. (a) Until the earlier of
----------------------------
(i) the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Independent Directors
prior to such time and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity) is first published
or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act
Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 20% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
- ------------------
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock (including a transfer to the Company) and not separately.
As promptly as reasonably practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of shares of Company Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of Exhibit A
hereto (the "Rights Certificates"), evidencing one Right for each share of
-------------------
Company Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Company Common
Stock has been made pursuant to Section 11(o) hereof, at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate rounding adjustments in accordance with Section 14(a) hereof, so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as reasonably practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Acquire Company Common
Stock in a form which may be appended to certificates that represent shares of
Company Common Stock, in
-6-
<PAGE>
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
-----------------
by first-class, postage prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company.
(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
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 Respironics,
Inc. (the "Company") and ChaseMellon Shareholder Services, L.L.C. (the
-------
"Rights Agent") dated as of June 28, 1996 (the "Rights Agreement"), the
------------- ----------------
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal office of the stock transfer
administration office of the Rights Agent. 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 as
promptly as reasonably practicable after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void."
With respect to certificates representing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
SECTION 4. Form of Rights Certificates. (a) The Rights Certificates
---------------------------
(and the forms of election to exercise, assignment and certificate to be printed
on the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may
-7-
<PAGE>
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 any rule or regulation thereunder or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to acquire such number of Units of Company Common Stock as shall be set forth
therein at the price set forth therein, but the amount and type of securities,
cash or other assets that may be acquired upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Independent Directors has determined to be part
of a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(e) hereof shall, upon the written direction of a
majority of the Independent Directors, contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of such Agreement.
SECTION 5. Countersignature and Registration. (a) Rights
---------------------------------
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile. Rights Certificates bearing the manual or
-8-
<PAGE>
facsimile signatures of the individuals who were at any time the proper officers
of the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the countersignature of
such Rights Certificates or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated 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 name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates: Mutilated Destroyed Lost or Stolen Rights Certificates: (a)
- ---------------------------------------------------------------------
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the 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 acquire a like
number of Units of Company Common Stock (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 to acquire. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and executed the certificate set forth 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) of the
Rights represented by such Rights Certificate or Affiliates or Associates
thereof as the Company shall reasonably request; whereupon the Rights Agent
shall, subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights
-9-
<PAGE>
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby and upon payment to the Company and the Rights Agent of all reasonable
expenses incident thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in substitution for the
lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and
representing the equivalent number of Rights, but, in the case of loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company and the
Rights Agent of such loss, theft or destruction of such Rights Certificate and,
if requested by the Company or the Rights Agent, indemnity also satisfactory to
it.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a) Prior
---------------------------------------------
to the earlier of (i) the Close of Business on the tenth anniversary hereof (the
"Final Expiration Date"), and (ii) the time at which the Rights are redeemed as
---------------------
provided in Section 23 hereof (the earlier of (i) and (ii) being the "Expiration
----------
Date"), the registered holder of any Rights Certificate may, subject to the
- ----
provisions of Sections 7(e) and 9(c) hereof, exercise the Rights evidenced
thereby 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 executed, to the Rights Agent
at the office of the Rights Agent designated for such purpose, together (if
applicable) with payment of the aggregate Purchase Price (as hereinafter
defined) for the number of Units of Company Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share (each
such one one-hundredth of a share being a "Unit") of Company Common Stock upon
----
exercise of Rights shall be $110, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
--------------
(c) below.
(c) As promptly as reasonably practicable following the occurrence of
the Distribution Date, the Company shall deposit with a corporation in good
standing organized under the laws of the United States or any State of the
United States, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by
-10-
<PAGE>
federal or state authority (such institution being the "Depositary Agent"),
----------------
certificates representing the shares of Company Common Stock that may be
acquired upon exercise of the Rights and shall cause such Depositary Agent to
enter into an agreement pursuant to which the Depositary Agent shall issue
receipts representing interests in the shares of Company Common Stock so
deposited. Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise and the certificate duly executed,
accompanied (if applicable) by payment, with respect to each Right so exercised,
of the Purchase Price for the Units of Company Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased thereby as set forth below and an amount equal to any applicable
transfer tax or evidence satisfactory to the Company of payment of such tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
requisition from the Depositary Agent depositary receipts representing such
number of Units of Company Common Stock as are to be acquired and the Company
will direct the Depositary Agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue Company Common
Stock, other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such Company Common Stock, other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. The payment (if applicable) of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash
or by certified or bank check or money order payable to the order of the
Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of a Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an
-11-
<PAGE>
Acquiring Person (or of any such Associate or Affiliate) which becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate) to
holders of equity interests in such Acquiring Person (or any such Associate or
Affiliate) or to any Person with whom the Acquiring Person (or such Associate or
Affiliate) has any continuing agreement, arrangement or understanding regarding
the transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Independent Directors has determined to be part
of a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights or any other Person as a result
of its failure to make any determination under this Section 7(e) or such Section
4(b) with respect to an Acquiring Person or its Affiliates, Associates or
transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate 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 exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to exercise set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Rights Certificates. All
---------------------------------------------------
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in 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 Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
-12-
<PAGE>
SECTION 9. Reservation and Availability of Capital Stock. (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 shares of Company Common
Stock, the number of shares of Company Common Stock 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 shares of Company Common Stock (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 shares of Company Common Stock to be issued and delivered
upon the exercise of the Rights may be listed on any national securities
exchange, the Company shall during the period from the Distribution Date through
the Expiration Date use its best efforts to cause all securities reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as reasonably practicable following the Distribution Date (the date on
which such registration statement is filed being the "Registration Date"), to
-----------------
file a registration statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities that may
--------------
be acquired upon exercise of the Rights (the "Registration Statement"), (ii) to
----------------------
cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement, and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws.
(d) The Company shall take such action as may be necessary to ensure
that all shares of Company Common Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) issued upon exercise of the Rights shall be, at the time of delivery of
the certificates or depositary receipts for such securities, duly and validly
authorized and issued and fully paid and non-assessable.
-13-
<PAGE>
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
-------- -------
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Company Common Stock, or any certificates or depositary receipts for
such Units of Company Common Stock (or, following the occurrence of a Triggering
Event, any other securities, cash or assets, as the case may be) to any person
other than the registered holder of the Rights Certificates evidencing the
Rights surrendered for exercise. The Company shall not be required to issue or
deliver any certificates or depositary receipts for Units of Company Common
Stock (or, following the occurrence of a Triggering Event, any other securities,
cash or assets, as the case may be) to, or in a name other than that of, the
registered holder upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. Company Common Stock Record Date. Each Person in whose
--------------------------------
name any certificate for Units of Company Common Stock (or, following the
occurrence of a Triggering Event, other securities) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Units of Company Common Stock (or, following the occurrence of a
Triggering Event, other securities) 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 (if applicable)
and any applicable transfer taxes was made; provided, however, that if the date
-------- -------
of such surrender and payment is a date upon which the Company Common Stock (or,
following the occurrence of a Triggering Event, other securities) transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Company Common Stock (or, following the
occurrence of a Triggering Event, other securities) transfer books of the
Company are open and, further provided, however, that if delivery of Units of
------- -------- --------
Company Common Stock is delayed pursuant to Section 9(c) hereof, such Persons
shall be deemed to have become the record holders of such Units of Company
Common Stock only when such Units first become deliverable. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
-14-
<PAGE>
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
-------------------------------------------------------
or Number of Rights. The Purchase Price, the number and kind of 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 Company Common Stock payable
in shares of Company Common Stock, (B) subdivide the outstanding Company
Common Stock, (C) combine the outstanding Company Common Stock into a
smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Company Common Stock or capital stock, as the case may be,
issuable on such date upon exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment (if applicable) of the Purchase Price
then in effect, the aggregate number and kind of shares of Company Common
Stock or capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall merge into the
Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such merger
or combination and Company Common Stock shall remain outstanding
and unchanged, (2) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for shares of
Company Common Stock, for other equity securities of the Company
or any such Subsidiary, or for securities exercisable for or
convertible
-15-
<PAGE>
into shares of equity securities of the Company or any of its
Subsidiaries (whether Company Common Stock or otherwise) or
otherwise obtain from the Company or any of its Subsidiaries,
with or without consideration, any additional shares of such
equity securities or securities exercisable for or convertible
into such equity securities (other than pursuant to a pro rata
distribution to all holders of Company Common Stock), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series
of transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity, assets
(including securities) on terms and conditions less favorable to
the Company or such Subsidiary or plan than those that could have
been obtained in arm's-length negotiations with an unaffiliated
third party, other than pursuant to a transaction set forth in
Section 13(a) hereof, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, in
one transaction or a series of transactions, to, from or with the
Company or any of the Company's Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries
or any trustee or fiduciary with respect to such plan acting in
such capacity (other than transactions, if any, consistent with
those engaged in, as of the date hereof, by the Company and such
Acquiring Person or such Associate or Affiliate), assets
(including securities) having an aggregate fair market value of
more than $20,000,000, other than pursuant to a transaction set
forth in Section 13(a) hereof, (5) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions, to,
from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such
plan acting in such capacity, any material trademark or material
service mark, other than pursuant to a transaction set forth in
Section 13(a) hereof, (6) shall receive, or any designee, agent
or representative of such Acquiring Person or any Affiliate or
Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other
than compensation for full-time employment as a regular employee
at rates in
-16-
<PAGE>
accordance with the Company's (or its Subsidiaries') past
practices, or (7) shall receive the benefit, directly or
indirectly (except proportionately as a holder of Company Common
Stock or as required by law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries or any employee benefit
plan maintained by the Company or any of its Subsidiaries or any
trustee or fiduciary with respect to such plan acting in such
capacity; or
(B) any Person shall become an Acquiring Person, other than
pursuant to any transaction set forth in Section 13(a) hereof; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger c consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section
13(a) apply (whether or not with or into or otherwise involving
an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share
of the outstanding shares of any class of equity securities of
the Company or any of its Subsidiaries that is directly or
indirectly beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person;
then, immediately upon the date of the occurrence of an event
----
described in Section 11(a)(ii)(A)-(C) hereof (a "Section 11(a)(ii)
-----------------
Event"), proper provision shall be made so that each holder of a Right
-----
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of shares of Company Common Stock as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the
then number of Units for which a Right is then exercisable and
dividing that product by (y) 50% of the current market price per share
of Common Stock (determined pursuant to Section 11(d) hereof) on the
earlier of (x) the date on which any Person becomes an Acquiring
Person and (y) the date on which a tender or exchange offer by any
Person (other than the Company, any
-17-
<PAGE>
Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity) is first published or
sent or given within the meaning of Rule 14d-4(a) of the Exchange Act
Regulations or any successor rule, if upon consummation thereof such
Person would be the Beneficial Owner of 20% or more of the shares of
Company Common Stock then outstanding.
(iii) In the event that the number of shares of Company Common
Stock which 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 is not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph
(ii) of this Section 11(a), the Company, by the vote of a majority of
the Independent Directors, shall: (A) determine the excess of (1) the
value of the shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess being the
--------------
"Spread"), and (B) with respect to each Right, make adequate provision
-------
to substitute for the shares of Common Stock so issuable, upon payment
of the Purchase Price, (1) cash, (2) other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock (such other shares being "common stock equivalents")),
------------------------
(3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by a
majority of the Independent Directors, after receiving advice from a
nationally recognized investment banking firm; provided, however, that
-------- -------
if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty days following the later of
(x) the first occurrence of a Section 11(a)(ii) Event and (y) the date
on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(iii) Trigger Date"), then the Company shall be
--------------------------------
obligated to deliver, upon the surrender for exercise of a Right,
shares of Company Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash shall have an aggregate
value equal to the Spread. To the extent that the Company determines
that some action need be taken pursuant to the first sentence of this
Section 11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights. For purposes of this Section 11(a)(iii), the value of a share
of Company
-18-
<PAGE>
Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per share of Company Common Stock on the
Section 11(a)(iii) Trigger Date and the value of any common stock
equivalent shall be deemed to have the same value as the Company
Common Stock 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 Company Common Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five calendar days after such record date) shares of Company Common
Stock (or shares having substantially the same rights, privileges and
preferences as shares of Company Common Stock ("Equivalent Company Common
-------------------------
Stock")) or securities convertible into Company Common Stock or Equivalent
-----
Company Common Stock at a price per share of Company Common Stock or per
share of Equivalent Company Common Stock (or having a conversion price per
share, if a security convertible into Company Common Stock or Equivalent
Company Common Stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Company Common Stock on such
record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be
the sum of the number of shares of Company Common Stock outstanding on such
record date plus the number of shares of Company Common Stock which the
aggregate offering price of the total number of shares of Company Common
Stock and/or Equivalent Company Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator
of which shall be the number of shares of Company Common Stock outstanding
on such record date plus the number of additional shares of Company Common
Stock and/or Equivalent Company Common Stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith
by a majority of the Independent 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. Shares of Company
Common Stock owned by or held for the account of the Company or any
Subsidiary shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the
-19-
<PAGE>
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 shares of Company Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
shares of Company Common Stock, but including any dividend payable in stock
other than Company Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Company Common
Stock on such record date less the fair market value (as determined in good
faith by a majority of the Independent Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holder of the Rights) of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants distributable in respect of a share of
Company Common Stock, and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Company Common Stock. 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, the "current market
--------------
price" per share of Company Common Stock or Common Stock on any date shall
-----
be deemed to be the average of the daily closing prices per share of such
shares for the ten consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, if prior to the
-------- -------
expiration of such requisite ten Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such shares
or securities convertible into such shares (other than the Rights), or (B)
any subdivision, combination or reclassification of such shares, then,
following the ex-dividend date for such dividend or the record date for
such subdivision, as the case may be, the "current market price" shall be
properly adjusted to take into account such event. The closing price for
each day shall be, if the shares are listed and admitted to trading on a
national
-20-
<PAGE>
securities exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or admitted to
trading or, if such shares are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use, or,
------
if on any such date such 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 such shares selected by a
majority of the Independent Directors. If on any such date no market maker
is making a market in such shares, the fair value of such shares on such
date as determined in good faith by a majority of the Independent Directors
shall be used. If such shares are not publicly held or not so listed or
traded, "current market price" per share shall mean the fair value per
share as determined in good faith by a majority of the Independent
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, if such shares are listed or admitted to trading
------------
on any national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to trading
is open for the transaction of business or, if such shares are not so
listed or admitted, a Business Day.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided,
--------
however, that any adjustments which by reason of this Section 11(e) are not
-------
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one-ten thousandth of a Unit or
share, as the case may be, of Company Common Stock or other share.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates such adjustment
and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Company Common
Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be
-21-
<PAGE>
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 Company
Common Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h),
(i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and
14 hereof with respect to the Company Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units or shares, as
the case may be, of Company Common Stock (or other securities or amount of
cash or combination thereof) that may be acquired 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 Units or shares, as the case may be, of Company Common Stock (calculated
to the nearest one ten-thousandth of a Unit or share, as the case may be)
obtained by (i) multiplying (x) the number of Units or shares, as the case
may be, of Company Common Stock covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units or shares, as the case may be, of Company
Common Stock that may be acquired upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of Rights shall
be exercisable for the number of Units or shares, as the case may be, of
Company Common Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price
in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on
-22-
<PAGE>
which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten days later than
the date of such public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates to be so
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 Units or shares, as the case may be, of Company Common Stock
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per Unit and the number of Units of Company Common Stock 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 number of Units or
shares, as the case may be, of Company Common Stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such fully paid and non-assessable number of
Units or shares, as the case may be, of Company Common Stock 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 that number of Units or shares, as the case may be, of
Company Common Stock and shares of other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
Units or shares, as the case may be, of Company Common Stock and shares of
other
-23-
<PAGE>
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 (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their good faith judgment a majority of the
Independent Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Company Common Stock, (ii) issuance
wholly for cash of any shares of Company Common Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Company
Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Company Common Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Company Common Stock, shall
not be taxable to such holders or shall reduce the taxes payable by such
holders.
(n) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Company Common Stock payable in shares of
Company Common Stock, (ii) subdivide the outstanding shares of Company
Common Stock, (iii) combine the outstanding shares of Company Common Stock
into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Company Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Company Common Stock following any such event shall
equal the result obtained by multiplying the number of Rights associated
with
-24-
<PAGE>
each share of Company Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of
Company Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of
Company Common Stock outstanding immediately following the occurrence of
such event.
SECTION 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
- ------
hereof, the Company shall (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
Company Common Stock, 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 shares of Company Common
Stock) in accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power. (a) In the event that, following the Stock Acquisition Date,
- -------------
directly or indirectly, either (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Company Common
Stock shall be converted into or exchanged for stock or other securities of any
other Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer) to any Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(n) hereof), in one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any such event being a "Section 13 Event"), then, and in
----------------
each such case, proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with this Agreement, such number of validly authorized and issued,
fully paid and nonassessable shares of Common Stock of
-25-
<PAGE>
the Principal Party (as such term is hereinafter defined), which shares shall
not be subject to any liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of Units of
Company Common Stock for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event and (2) dividing that product by 50% of
the current market price (determined pursuant to Section 11(d) hereof) per share
of the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to ensure that
the provisions of this Agreement shall thereafter be applicable to its shares of
Common Stock thereafter deliverable upon the exchange of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no further effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
---------------
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate current market
price (determined pursuant to Section 11(d) hereof) and (B) if no
securities are so issued, the Person that is the other party to such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined
-26-
<PAGE>
pursuant to Section 11(d) hereof); provided, however, that in any such
-------- -------
case, (1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve-month period registered
under Section 12 of the Exchange Act ("Registered Common Stock"), or such
-----------------------
Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which
has Registered Common Stock outstanding, "Principal Party" shall refer to
the ultimate parent entity of such first-mentioned Person; (3) if the
Common Stock of such Person is not Registered Common Stock or such Person
is not a corporation, and such Person is directly or indirectly controlled
by more than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Principal Party" shall refer to
whichever of such other Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and (4) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more than one
Person, and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest shareholders equity or, if no
such ultimate parent entity is a corporation, shall refer to whichever
ultimate parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the
Securities Act with respect to the Common Stock that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of
the Securities Act) until the Expiration Date, and (C) as soon as
practicable following the execution of such agreement, take such action as
may be required to
-27-
<PAGE>
ensure that any acquisition of such Common Stock upon the exercise of the
Rights complies with any applicable state security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then current
market price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of this Section 13; then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been cancelled, waived or amended,
or that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) The 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).
SECTION 14. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the 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, if
the Rights are listed or admitted to trading on a national securities
-28-
<PAGE>
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Independent Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by a majority of the Independent Directors shall be
used and such determination shall be described in a statement filed with the
Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Company Common Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Company Common Stock) upon exercise of the Rights or
to distribute certificates which evidence such fractional shares of Company
Common Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Company Common Stock). In lieu of such fractional
shares of Company Common Stock that are not integral multiples of one one-
hundredth of a share, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the then current market price of a share
of Company Common Stock on the day of exercise, determined in accordance with
Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. Rights of Action. All rights of action in respect of
----------------
this Agreement, other than rights of action vested in the Rights Agent pursuant
to Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights
-29-
<PAGE>
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office 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 executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Company Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
-------- -------
order, decree or ruling lifted or otherwise overturned as promptly as
practicable.
-30-
<PAGE>
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Company Common Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, except as provided in Section 24
hereof, to receive notice of meetings or other actions affecting shareholders,
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. Concerning the Rights Agent. (a) The Company agrees to
---------------------------
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability hereunder.
(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 Company Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been 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 corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the
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<PAGE>
corporate trust or shareholder services businesses 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 document or any further act on
the part of any of the parties hereto; provided, however, that such corporation
-------- -------
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be specified herein)
may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice
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<PAGE>
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent;
provided, however, that so long as any Person is an Acquiring Person
-------- -------
hereunder, such certificate shall be signed and delivered by a majority of
the Independent Directors; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for 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 failure
by the Company to satisfy conditions contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or 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 by the Rights Agent of the certificate describing any such
adjustment contemplated by Section 12); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Company Common Stock or any other securities
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Company Common Stock or any other securities will,
when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.
-33-
<PAGE>
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer; provided, however, that so long as
-------- -------
any Person is an Acquiring Person hereunder, the Rights Agent shall accept
such instructions and advice only from a majority of the Independent
Directors and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with such instructions of the
majority of the Independent Directors. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable for any action taken by, or omission of,
the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any such officer
of the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents.
(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 or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing
that
-34-
<PAGE>
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 completed, not signed 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 without first
consulting with the Company. If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights Certificate
is not owned by a person described in Section 4(b) or Section 7(e) hereof
and shall not be charged with any knowledge to the contrary.
SECTION 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty days' prior notice in writing mailed to the Company, and
to each transfer agent of the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
days' prior notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Company Common
Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign of be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or any state of the United States in good
standing, shall be authorized to do business as a banking institution in the
state of New York, shall be authorized under such laws to exercise corporate
trust or stock transfer powers, shall be subject to supervision or examination
by federal or state authorities and shall have at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an
Affiliate of a corporation described
-35-
<PAGE>
in clause (a). After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
-----------------------------------
of the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by a majority of the Independent Directors to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Independent 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
would create a significant risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. Redemption and Termination. (a) Subject to Section 30
--------------------------
hereof, the Company may, at its option, by action of a majority of the
Independent Directors, at any time prior to the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date or (ii)
the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock
-36-
<PAGE>
dividend or similar transaction occurring after the date hereof (such redemption
price being the "Redemption Price"), and the Company may, at its option, by
----------------
action of a majority of the Independent Directors, pay the Redemption Price
either in shares of Company Common Stock (based on the "current market price",
as defined in Section 11(d) hereof, of the shares of Company Common Stock at the
time of redemption) or cash.
(b) Immediately upon the action of a majority of the Independent
Directors ordering the redemption of the Rights, evidence of which shall be
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of a majority of the Independent
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. 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 to the holders of Company Common Stock or to make
any other distribution to the holders of Company Common Stock (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), (ii) to offer to the holders of Company Common Stock rights or
warrants to subscribe for or to purchase any additional shares of Company Common
Stock or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Company Common Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Company Common Stock), (iv) to effect any consolidation or merger into or with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of more than 50% of the assets or of the Company
and its Subsidiaries (taken as a whole) to any other Person or earning power
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of such
proposed action, which shall
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<PAGE>
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Company
Common Stock, if any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of
Company Common Stock for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Company Common Stock whichever shall be the earlier; provided,
--------
however, no such notice shall be required pursuant to this Section 24, if any
- -------
Subsidiary of the Company effects a consolidation or merger with or into, or
effects a sale or other transfer of assets or earnings power to, any other
Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as reasonably
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 25. Notices. All notices and other communications provided
-------
for hereunder shall, unless stated herein, be in writing (including by telex,
telegram or cable) and mailed or sent or delivered, if to the Company, at its
address at:
Respironics, Inc.
1001 Murry Ridge Drive
Murrysville, PA 15668
and if to the Rights Agent, at its address at:
ChaseMellon Shareholder Services, L.L.C.
4 Station Square
Pittsburgh, PA 15219
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such older as shown on the registry books of the Company.
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<PAGE>
SECTION 26. Supplements and Amendments. Prior to the Distribution
--------------------------
Date and subject to the penultimate sentence of this Section 26, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
any provision of this Agreement without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company 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 (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, however, that
-------- --------
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) subject to Section 30 hereof, a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) 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. Upon the delivery of a certificate from an
appropriate officer of the Company or, so long as any Person is an Acquiring
Person hereunder, from the majority of the Independent Directors which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 26, 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
Purchase Price, the Expiration Date or the number of Units of Company Common
Stock for which a Right is exercisable without the approval of a majority of the
Independent Directors. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Company Common Stock.
SECTION 27. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. Determinations and Actions by the Board of Directors,
-----------------------------------------------------
etc. For all purposes of this Agreement, any calculation of the number of
- ----
shares of Company Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Company Common Stock of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect
-39-
<PAGE>
on the date hereof. Except as otherwise specifically provided herein, the Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power (i) to interpret the provisions of this Agreement, and (ii) to make
all determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board or by a majority of the
Independent Directors in good faith shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board or any member thereof to any liability to
the holders of the Rights.
SECTION 29. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
SECTION 30. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
- -------- -------
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Independent Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, 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 a majority of the Independent Directors.
SECTION 31. Governing Law. This Agreement, each Right and each
-------------
Rights Certificate issued hereunder shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely in such State.
-40-
<PAGE>
SECTION 32. Counterparts. This Agreement may be executed (including
------------
by facsimile) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. Descriptive Headings. The headings contained in this
--------------------
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first above written.
RESPIRONICS, INC.
By /s/ Daniel J. Bevevino
-----------------------
Name: Daniel J. Bevevino
Title: Vice President and
Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
By /s/ Marilyn Spisak
--------------------
Name: Marilyn Spisak
Title: Assistant Vice President
-41-
<PAGE>
EXHIBIT A
---------
[Form of Rights Certificate]
Certificate No. __________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
RESPIRONICS, INC.
This certifies that ______________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of June 28, 1996 (the "Rights Agreement"; terms
----------------
defined therein are used herein with the same meaning unless otherwise defined
herein) between Respironics, Inc., a Delaware corporation (the "Company"), and
-------
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (which term shall
include any successor Rights Agent under the Rights Agreement), to purchase from
the Company at any time after the Distribution Date and prior to the Expiration
Date at the office of the Rights Agent, one one-hundredth of a fully paid and
non-assessable share of common stock, par value $.01 per share (the "Common
------
Stock"), of the Company at the Purchase Price initially of $110 per one one-
- -----
hundredth share (each such one one-hundredth of a share being a "Unit") of
----
Common Stock, upon presentation and surrender of this Rights Certificate with
the Election to Exercise and related certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of Units which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
Unit set forth above shall be subject to adjustment in certain events as
provided in the Rights Agreement.
____________________
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or, under
certain circumstances described in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate, 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.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to receive, upon
exercise of such Rights, Common Stock of the Company or cash or other assets,
all as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to receive, upon
exercise of such Rights, capital stock of an entity other than the Company or
cash or other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms 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. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company under certain
circumstances at its option at a redemption price of $0.01 per Right, payable at
the Company's option in cash or in common stock of the Company, subject to
adjustment in certain events as provided in the Rights Agreement.
-2-
<PAGE>
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Common Stock), but in lieu thereof
a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities 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 Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______ __, 199_/ 200_.
ATTEST: RESPIRONICS, INC.
By_____________________ By_____________________
Name: Name:
Title Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
By_____________________
Name:
Title:
-3-
<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:__________ __, 199_/200_
_____________________
Signature
Signature Guaranteed:
-4-
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ________ __, 199_/20_
_____________________
Signature
Signature Guaranteed:
-5-
<PAGE>
----------------------------------
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.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-6-
<PAGE>
FORM OF ELECTION TO EXERCISE
----------------------------
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: RESPIRONICS, INC.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Rights Certificate to acquire in exchange for the surrender
of such Rights the Units of Common Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other person or other
property which may be issuable upon the exercise of the Rights) and requests
that certificates for such Units be issued in the name of and delivered to:
_________________________________
(Please print name and address)
_________________________________
Please insert social security
or other identifying numbers:__________
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 print name and address)
_________________________________
Please insert social security
or other identifying numbers:
Dated: ________ __, 199_/200_
_____________________
Signature
Signature Guaranteed:
-7-
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: ________ __, 199_/200_
_____________________
Signature
Signature Guaranteed:
----------------------------------
-8-
<PAGE>
NOTICE
------
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-9-
<PAGE>
EXHIBIT B
---------
SUMMARY OF RIGHTS TO ACQUIRE
COMMON STOCK
Effective June 28, 1996, the Board of Directors of Respironics, Inc.
(the "Company") declared a distribution of one Right for each outstanding share
-------
of Common Stock, par value $.01 per share (the "Company Common Stock"), to
--------------------
stockholders of record at the close of business on July 26, 1996 (the "Record
------
Date") and for each share of Company Common Stock issued (including shares
- ----
distributed from treasury) by the Company thereafter and prior to the
Distribution Date. Each Right entitles the registered holder, subject to the
terms of the Rights Agreement (as defined below), to purchase from the Company
one one-hundredth of a share (a "Unit") of Company Common Stock, at a Purchase
----
Price of $110 per Unit, subject to adjustment. The Purchase Price is payable in
cash or by certified or bank check or money order payable to the order of the
Company. The description and terms of the Rights are set forth in a Rights
Agreement between the Company and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement").
----------------
Copies of the Rights Agreement have been filed with the Securities and
Exchange Commission as exhibits to a Registration Statement on Form 8-A dated
June 28, 1996 (the "Form 8-A"). Copies of the Rights Agreement are 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 all
the provisions of the Rights Agreement, including the definitions therein of
certain terms, which Rights Agreement is incorporated herein by reference.
The Rights Agreement
- --------------------
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) 10 business days
-----------------
following a public announcement (the date of such announcement being the "Stock
-----
Acquisition Date") that a person or group of affiliated or associated persons
- ----------------
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary) (an "Acquiring Person") has acquired,
----------------
obtained the right to acquire, or otherwise obtained beneficial ownership of 20%
or more of the then outstanding shares of Company Common Stock, and (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
<PAGE>
in a person or group beneficially owning 20% or more of the Company Common Stock
from time to time outstanding.
Until the Distribution Date, (i) the Rights will be evidenced by
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from treasury) will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates representing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) an Acquiring Person becomes the beneficial owner of 20% or
more of the then outstanding shares of Company Common Stock, (iii) an Acquiring
Person engages in one or more "self-dealing" transactions as set forth in the
Rights Agreement, or (iv) during such time as there is an Acquiring Person, an
event occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% (e.g., by means of a reverse stock split or
----
recapitalization), then, in each such case, each holder of a Right will
----
thereafter have the right to acquire, upon exercise of such Right, that number
of shares of Company Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) having a value equal to two times the
exercise price of the Right. The exercise price is the Purchase Price
multiplied by the number of Units of Company Common Stock issuable upon exercise
of a Right prior to the events described in this paragraph. Notwithstanding any
of the foregoing, following the occurrence of any of the events set forth in
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with
-2-
<PAGE>
the Company and all or part of the Company Common Stock is converted or
exchanged for securities, cash or property of any other Person or (iii) 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 described
above) shall thereafter have the right to acquire, upon exercise of such Right,
common stock of the Acquiring Person having a value equal to two times the
exercise price of the Right.
The Purchase Price and the number of Units or shares, as the case may
be, of the Company Common Stock 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 subdivision, combination or reclassification of, the Company
Common Stock, (ii) if holders of the Company Common Stock are granted certain
rights or warrants to subscribe for Company Common Stock or convertible
securities at less than the current market price of the Company Common Stock, or
(iii) upon the distribution to the holders of the Company Common Stock of
evidences of indebtedness, cash or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units or shares of the
Company Common Stock. In lieu thereof, an adjustment in cash may be made based
on the market price of the Company Common Stock prior to the date of exercise or
exchange.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Independent Directors may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (subject to adjustment in certain
events) (the "Redemption Price"), payable, at the election of such majority of
----------------
the Independent Directors, in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Independent Directors ordering
the redemption of the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote o to receive dividends. While the distribution of
the Rights will not be taxable to stockholder or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable or exchangeable for Units or shares of
Company Common Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common
-3-
<PAGE>
Stock at any time prior to the Distribution Date. After the Distribution Date,
the provisions of the Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
-------- -------
governing redemption shall be made at such time as the Rights are not
redeemable.
-4-
