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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BIOLASE TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 87-0442441
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(State of incorporation or organization) (IRS Employer Identification No.)
981 Calle Amanecer, San Clemente, California 92673
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(Address of principal executive offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of securities
securities pursuant to Section pursuant to Section 12(g) of the
12(b) of the Exchange Act and Exchange Act and is effective
is effective pursuant to pursuant to General Instruction
General Instruction A.(c), A.(d), please check the following
please check the following box. box. [X]
[_]
Securities to be registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None
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Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Preferred Stock, par value $.001 per share
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(Title of class)
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(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered.
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On December 18, 1998, the Board of Directors of BioLase Technology,
Inc. (the "Company") authorized and declared a dividend of one preferred stock
purchase right (a "Right") for each share of common stock, par value $.001 per
share, of the Company (the "Common Shares"). The dividend is payable on January
11, 1999 to the holders of record of Common Shares as of the close of business
on December 31, 1998 (the "Record Date").
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of December
31, 1998 by and between the Company and U.S. Stock Transfer Corporation, as
Rights Agent (the "Rights Agent").
1. Common Share Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a)
the Rights shall not be exercisable, (b) the Rights shall be attached to and
trade only together with the Common Shares and (c) the stock certificates
representing Common Shares shall also represent the Rights attached to such
Common Shares. Common Share certificates issued after the Record Date and prior
to the Distribution Date shall contain a notation incorporating the Rights
Agreement by reference.
2. Distribution Date
The "Distribution Date" is the earliest of (a) the tenth business
day following the date of the first public announcement that any person (other
than the Company, certain related entities, and certain other limited classes of
persons) has become the beneficial owner of fifteen percent (15%) or more of the
then outstanding Common Shares (such person is hereinafter referred to as a "15%
Stockholder" and the date of such public announcement is hereinafter referred to
as the "15% Ownership Date"), (b) the tenth business day (or such later day as
shall be designated by the Company Board of Directors) following the date of the
commencement of, or the announcement of an intention to make, a tender offer or
exchange offer, the consummation of which would cause any person to become a 15%
Stockholder, or (c) the first date, on or after the 15% Ownership Date, upon
which the Company is acquired in a merger or other business combination in which
the Company is not the surviving corporation or in which the outstanding Common
Shares are changed into or exchanged for stock or other securities of any person
or cash or other property, or upon which 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business). In calculating the percentage of outstanding
Common Shares that is beneficially owned by any person, such person shall be
deemed to beneficially own (i) any Common Shares or other securities
beneficially owned by affiliates or associates of such person and (ii) any
Common Shares issuable upon the exercise, exchange or conversion of any options,
warrants or other securities beneficially owned by such person which Common
Shares shall be deemed to be outstanding for purposes of such calculation;
provided, however, that Common Shares issuable upon the exercise, exchange or
conversion of any
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options, warrants or other securities not beneficially owned by such person
shall not be deemed outstanding for the purpose of such calculation.
Upon the close of business of the Distribution Date, the Rights
shall separate from the Common Shares, Right certificates shall be issued, and
the Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 of this Item 1 below.
3. Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. Expiration of Rights
The Rights shall expire on December 31, 2008, unless earlier
redeemed or exchanged, unless the Distribution Date has previously occurred and
the Rights have separated from the Common Shares, in which case the Rights will
expire on the tenth anniversary of the Distribution Date.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged,
they may be exercised, at the option of the holders, pursuant to paragraphs (a),
(b) or (c) below. No Right may be exercised more than once or pursuant to more
than one of such paragraphs. From and after the first event of the type
described in paragraphs (b) or (c) below, each Right that is beneficially owned
by a 15% Stockholder shall be null and void, whether in the hands of the 15%
Stockholder and its affiliates and associates and any other successor holder.
(a) Right to Purchase Preferred Shares. From and after the
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close of business on the Distribution Date, each Right (other than a Right that
has become void) shall be exercisable to purchase one one-hundredth (1/100th) of
a share of Series B Junior Participating Cumulative Preferred Stock, par value
$.001 per share, of the Company (the "Preferred Shares"), at an exercise price
of Thirty Dollars ($30.00) (the "Exercise Price"). Prior to the Distribution
Date, the Company may substitute for all or any portion of the Preferred Shares
that would otherwise be issuable upon exercise of the Rights, cash, assets or
other securities having the same aggregate value as such Preferred Shares. The
Preferred Shares are non-redeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred Shares. The holder of a Preferred Share is
entitled to receive when, as and if declared, the greater of (i) cash and non-
cash dividends in an amount equal to 100 times the dividends declared on each
Common Share or (ii) a preferential annual dividend of $1.00 per Preferred Share
($.01 per one one-hundredth of a Preferred Share). In the event of liquidation,
the holders of Preferred Shares shall be entitled to receive a liquidation
payment in an amount equal to the greater of (1) $1.00 per Preferred Share ($.01
per one one-hundredth of a Preferred Share), plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to
100
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times the aggregate amount to be distributed per Common Share. Each Preferred
Share has 100 votes per share (one vote per one one-hundredth of a Preferred
Share), voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, the
holder of a Preferred Share shall be entitled to receive 100 times the amount
received per Common Share. The rights of the Preferred Shares as to dividends,
voting and liquidation preferences are protected by anti-dilution provisions. It
is anticipated that the value of one one-hundredth of a Preferred Share should
approximate the value of one Common Share.
(b) Right to Purchase Common Shares of the Company. From and after
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the close of business on the tenth business day following the 15% Ownership
Date, each Right (other than a Right that has become void) shall be exercisable
to purchase at the Exercise Price (initially $30.00) Common Shares with a market
value equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the Company
shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as the Common Shares otherwise
issuable.
(c) Right to Purchase Common Stock of a Successor Corporation. If,
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on or after the 15% Ownership Date, (i) the Company is acquired in a merger or
other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or other securities of any person or cash or
other property, or (iii) 50% or more of the Company's consolidated assets or
earning power are sold (other than in transactions in the ordinary course of
business), then each Right (other than a Right that has become void) shall
thereafter be exercisable to purchase at the Exercise Price shares of common
stock of the surviving corporation or purchaser, respectively, with an aggregate
market value equal to two times the Exercise Price.
6. Adjustments to Prevent Dilution
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution. With certain exceptions, no adjustment in the
Exercise Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. Cash Paid Instead of Issuing Fractional Securities
The Company is not required to issue fractional securities (other than
fractions of Preferred Shares that are integral multiples of one one-hundredth
of a Preferred Share and such fractional interests may, at the election of the
Company, be evidenced by depositary receipts) upon exercise of a Right and in
lieu thereof, an adjustment in cash shall be made based on the market price of
such securities on the last trading date prior to the date of exercise.
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8. Redemption
At any time prior to the earlier of (a) the tenth business day (or
such later day as shall be designated by the Company's Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 15% Stockholder, (b) the tenth business day after the 15%
Ownership Date or (c) the first event of the type giving rise to exercise rights
described in Section 5(c) of this Item 1 above, the Board of Directors may, at
its option, direct the Company to redeem the Rights in whole, but not in part,
at a price of $.001 per Right (the "Redemption Price"), in which case the
Company shall so redeem the Rights. Immediately upon such action by the Board
of Directors (the date of such action is the "Redemption Date"), the right of
the holders of Rights thereafter shall be to receive the Redemption Price.
9. Exchange
During the period of 180 days following the tenth business day after
the 15% Ownership Date, the Board of Directors of the Company may, at its
option, direct the exchange of all, but not less than all, of the then
outstanding Rights at an exchange ratio per Right equal to that number of Common
Shares, Preferred Shares, other equity or debt securities of the Company, other
property, or any combination of the foregoing, which, as of the date of the
Board of Directors' action, has a current market price equal to the difference
between the Exercise Price and the current market price of the shares that would
otherwise be issuable upon exercise of a Right on such date (the "Exchange
Ratio"), and the Company shall so exchange the Rights. Immediately upon such
action by the Board of Directors, the right to exercise Rights shall terminate
and the only right of the holders of Rights thereafter shall be to receive a
number of Common Shares, Preferred Shares, other equity or debt securities of
the Company, other property, or any combination of the foregoing equal to the
Exchange Ratio.
10. No Stockholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. Amendment of Rights Agreement
The Board of Directors may, from time to time, without the approval of
any holder of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of the Rights Agreement in any manner, whether or not such
supplement or amendment is adverse to any holder of Rights, in which case the
Company and the Rights Agent shall so supplement or amend such provision;
provided, however, that from and after the earliest of (a) the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 15% Stockholder, (b) the 15% Ownership Date, (c) the
first event of the type giving rise to exercise rights described in Section 5(c)
of this Item 1 above, or (d) the
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Redemption Date, the Rights Agreement shall not be supplemented or amended in
any manner that would materially and adversely affect any holder of outstanding
Rights other than a 15% Stockholder.
The Rights are expected to have certain effects that would delay,
defer or prevent a change in control of the Company. The Rights if exercised
would cause substantial dilution to a person or group attempting to acquire
control of the Company on terms not approved by the Board of Directors, and that
potential dilution is likely to discourage or delay an attempt to acquire
control of the Company on terms not approved by the Board of Directors. The
existence of the Rights are expected to help provide the Board of Directors with
adequate time to evaluate proposals to acquire control of the Company and in the
context of that evaluation to determine whether an alternative proposal which in
the opinion of the Board of Directors would be more favorable to the Company and
its stockholders can be obtained, which in turn is expected to delay, defer or
discourage attempts to acquire control of the Company on terms not approved by
the Board of Directors.
Item 2. Exhibits.
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Exhibit 1 The Rights Agreement, dated as of December 31, 1998 between BioLase
Technology, Inc. and U.S. Stock Transfer Corporation, as Rights
Agent, which includes as Exhibit A thereto the form of Rights
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Certificate to be distributed to holders of Rights after the
Distribution Date (as that term is defined in the Rights Agreement)
and as Exhibit B thereto the form of Certificate of Designations of
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Series B Junior Participating Cumulative Preferred Stock.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned thereto duly authorized.
BioLase Technology, Inc.
December 22, 1998 By: /s/ Stephen R. Tartamella
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Name: Stephen R. Tartamella
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Title: Vice President & Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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1 The Rights Agreement, dated as of December 31, 1998 between
BioLase Technology, Inc. and U.S. Stock Transfer Corporation, as
Rights Agent, which includes as Exhibit A thereto the form of
Rights Certificate to be distributed to holders of Rights after
the Distribution Date (as that term is defined in the Rights
Agreement) and as Exhibit B thereto the form of Certificate of
Designations of Series B Junior Participating Cumulative
Preferred Stock.
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EXHIBIT 1
RIGHTS AGREEMENT
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This Rights Agreement (the "Agreement") is made and entered into as of the
31st day of December, 1998 by and between BIOLASE TECHNOLOGY, INC., a Delaware
corporation (the "Company"), and U. S. STOCK TRANSFER CORPORATION, a California
corporation (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one preferred share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding at the Close of
Business on December 31, 1998 (the "Record Date"), each Right representing the
right to purchase one one-hundredth (1/100) of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions set forth herein, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Expiration Date
(as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
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For purposes of this Agreement, the following terms have the meanings
indicated:
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act, as in effect on the
date hereof.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"Beneficially Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 promulgated under the Exchange Act, in
each case as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with regulatory
requirements, the fulfillment of a condition or otherwise) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise, provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
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Beneficially Own, (a) securities that may be acquired pursuant to the Rights
being issued hereunder or (b) securities tendered pursuant to a tender offer or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange;
(iii) which such Person or any such Person's Affiliates or Associates
has the right to vote, whether alone or in concert with others, pursuant to any
agreement, arrangement or understanding, provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, any security if
the agreement, arrangement or understanding to vote such security (A) arises
solely from a revocable proxy given to such Person or any of such Person's
Affiliates or Associates in response to a public proxy solicitation made
pursuant to and in accordance with the applicable rules and regulations
promulgated under the Exchange Act, and (B) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iv) which are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (other than voting pursuant to a revocable proxy as
described in the proviso to clause (iii) of this definition of "Beneficial
Owner") or disposing of any securities of the Company.
Notwithstanding anything to the contrary in this Section l(b), a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in either the State of New York or the State of
California are authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., Los Angeles
time, on such date; provided, however, that if such date is not a Business Day,
it shall mean 5:00 p.m., Los Angeles time, on the next succeeding Business Day.
"Closing Price" of a stock or other security on any day shall be the last
sale price, regular way, per share of such stock or unit of such other security
on such day or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities exchange on
which such stock or other security is listed or admitted to trading or, if such
stock or other security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the
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National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use or, if on any such date such stock
or other security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker that
makes a market in such stock or other security and that is selected by the Board
of Directors of the Company.
"Common Share" shall mean one share of the Common Stock, par value $0.001
per share, of the Company, unless used with reference to a Person other than the
Company, in which case it shall mean one share of each class of stock of such
Person having the right to vote generally in the election of directors or, if
such Person is a Subsidiary of another Person, one Common Share of the Person
that ultimately controls such Person.
"Common Share Equivalent" shall have the meaning ascribed to it in Section
11(a)(iii) hereof.
"Current Market Price" per share of a stock or unit of any other security
on any date shall mean the average of the daily Closing Prices of such stock or
other security for the 30 consecutive Trading Days through and including the
Trading Day immediately preceding the date in question; provided, however, that
if any event shall have caused the Closing Price on any Trading Day during such
30-day period not to be fully comparable with the Closing Price on the date in
question (or, if no Closing Price is available on the date in question, on the
last Trading Day preceding the date in question for which a Closing Price is
available), then each such non-comparable Closing Price so used shall be
appropriately adjusted by the Board of Directors in order to make the Closing
Price on each Trading Day during the period used for the determination of the
Current Market Price fully comparable with the Closing Price on such date in
question (or, if applicable, such preceding Trading Day). "Current Market
Price" per share of any stock or unit of such other security that is not
publicly held or so listed or traded, and "Current Market Price" of any other
property, shall mean the fair value per share of such stock or unit of such
other security, or the fair value of such other property, respectively, as
determined in good faith by the Board of Directors based upon such appraisals or
valuation reports of such independent experts as the Board of Directors shall in
good faith determine appropriate, which determination shall be described in a
statement filed by the Company with the Rights Agent.
"Distribution Date" shall have the meaning ascribed to it in Section 3
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exempt Person" shall mean the Company, any wholly-owned Subsidiary of the
Company, any employee benefit plan of the Company or of a Subsidiary of the
Company, and any Person holding Voting Shares for or pursuant to the terms of
any such employee benefit plan.
"Exercise Price" shall have the meaning ascribed to it in Section 7(c)
hereof.
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"Expiration Date" shall mean December 31, 2008.
"15% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or a
15% Stockholder setting forth the facts establishing that a Person has become a
15% Stockholder, provided that if an event occurs subsequent to December 18,
1998 but on or prior to the date hereof which would otherwise constitute a 15%
Ownership Date with respect to a Person, the 15% Ownership Date with respect to
such Person shall be deemed to be the first Business Day subsequent to the date
hereof.
"15% Stockholder" shall mean any Person that Beneficially Owns 15% or more
of the Voting Shares of the Company then outstanding; provided, however, that
the term "15% Stockholder" shall not include: (i) an Exempt Person; (ii) any
Person that would not otherwise be a 15% Stockholder but for a reduction in the
number of outstanding Voting Shares resulting from the acquisition of Voting
Shares by the Company on or after the date hereof; provided, however, that the
term "15% Stockholder" shall include such a Person from and after the first date
upon which (A) such Person, since the date of the acquisition of Voting Shares
by the Company which raised the proportion of Voting Shares which are
Beneficially Owned by such Person to 15% or more of the Voting Shares of the
Company, shall have acquired Beneficial Ownership of, in the aggregate, a number
of additional Voting Shares of the Company equal to 1% or more of the Voting
Shares of the Company then outstanding and (B) such Person, after such
acquisition of additional Voting Shares, shall Beneficially Own 15% or more of
the Voting Shares of the Company then outstanding; or (iii) any Person that
would otherwise by a 15% Stockholder which the Board of Directors in good faith
determines has become such inadvertently and which as promptly as practicable
after such determination divests a sufficient number of Voting Shares so that
such Person would no longer be a 15% Stockholder as defined herein. In
calculating the percentage of the outstanding Voting Shares that are
Beneficially Owned by a Person for purposes of this definition, Voting Shares
that are Beneficially Owned by such Person shall be deemed outstanding, and
Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights, warrants or options shall not be deemed
outstanding. Any determination made by the Board of Directors of the Company as
to whether any Person is or is not a 15% Stockholder shall be conclusive and
binding upon all holders of Rights.
"Person" shall mean any individual, firm, partnership, corporation, limited
liability company, association, group (as such term is used in Rule 13d-5
promulgated under the Exchange Act as in effect on the date hereof) or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Share" shall mean one share of the Series B Junior Participating
Cumulative Preferred Stock, par value $0.001 per share, of the Company, which
shall have the rights and preferences set forth in the form of Certificate of
Designations attached to this Agreement as Exhibit B.
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"Preferred Share Equivalent" shall have the meaning ascribed to it in
Section 11(b) hereof.
"Record Date" shall have the meaning ascribed to it in the recitals hereto.
"Redemption Date" shall mean the date of the action of the Board of
Directors of the Company authorizing and directing the redemption of the Rights
pursuant to Section 23(a) hereof or the exchange of the Rights pursuant to
Section 24(a) hereof.
"Redemption Price" shall have the meaning ascribed to it in Section 23(a)
hereof.
"Right Certificate", as that term is used with respect to any period prior
to the Distribution Date, shall have the meaning ascribed to it in Section 3(b)
hereof, and, as that term is used with respect to any period on or after the
Distribution Date, shall have the meaning ascribed to it in Section 3(c) hereof.
"Rights Expiration Date" shall mean the Expiration Date, except if there
has been a Distribution Date prior to the Expiration Date, then it shall mean
the tenth anniversary of the Distribution Date.
"Section 11(a)(ii) Event" shall have the meaning ascribed to it in Section
11(a)(ii) hereof.
"Section 13(a) Event" shall have the meaning ascribed to it in Section
13(a) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any Person shall mean any corporation or other Person of
which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
"Trading Day" shall mean, as to any stock or other security, a day on which
the principal national securities exchange on which such stock or other security
is listed or admitted to trading is open for the transaction of business or, if
such stock or other security is not listed or admitted to trading on any
national securities exchange, a day on which banking institutions in the State
of New York are authorized or obligated by law or executive order to close.
"Voting Share" shall mean (i) a Common Share of the Company and (ii) any
other share of capital stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with the Common Shares in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
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Section 2. Appointment of Rights Agent.
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The Company hereby appoints the Rights Agent to act as agent for the Company
and the holders of Rights in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
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(a) "Distribution Date" shall mean the date, after the date hereof, that is
the earliest of (i) the tenth Business Day (or such later day as shall be
designated by the Board of Directors of the Company) following the date of the
commencement of, or the first public announcement of the intent of any Person,
other than an Exempt Person, to commence a tender offer or exchange offer, the
consummation of which would cause any Person to become a 15% Stockholder, (ii)
the date of the first Section 11(a)(ii) Event or (iii) the date of the first
Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed also to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby,
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate substantially in the form of Exhibit
A hereto representing one Right for each Common Share so held. From and after
the Distribution Date, the Rights shall be represented solely by such Right
Certificates and may only be transferred by the transfer of such Right
Certificates, and the holders of such Right Certificates, as listed in the
records of the Company or any transfer agent or registrar for such Rights, shall
be the record holders of such Rights.
(d) Certificates for Common Shares issued at any time after the Record Date
and prior to the earliest of the Distribution Date, the Redemption Date or the
Expiration Date, shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of December 31, 1998 by
and between BioLase Technology, Inc. and U. S. Stock Transfer Corporation,
as Rights Agent (the "Rights Agreement"), as amended to date, the terms and
conditions of which are hereby incorporated herein by
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<PAGE>
reference and a copy of which is on file at the principal executive offices
of BioLase Technology, Inc. Under certain circumstances specified in the
Rights Agreement, such Rights will be represented by separate certificates
and will no longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights beneficially owned
by certain persons may become null and void. BioLase Technology, Inc. will
mail to the record holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a written request
therefor. As described in the Rights Agreement, Rights issued to any Person
who becomes a 15% Stockholder (as defined in the Rights Agreement) shall
become null and void.
(e) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant to the terms
of a Rights Agreement dated as of December 31, 1998 by and between BioLase
Technology, Inc. and U. S. Stock Transfer Corporation, as Rights Agent.
(f) In the event that at any time on or after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Expiration Date, the
Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event, then,
unless the Board of Directors of the Company shall have provided otherwise at
the time of the issuance or grant of such conversion rights, exchange rights,
rights (other than Rights), warrants or options, the Rights Agent shall, as soon
as practicable after the date of such event, send by first-class, postage-
prepaid mail to the record holder of such Common Shares, at the address of such
holder as shown on the records of the Company, a Right Certificate substantially
in the form of Exhibit A hereto representing one Right for each Common Share so
issued.
(g) Notwithstanding the foregoing provisions of this Section 3, the Rights
Agent shall not send any Right Certificate to any 15% Stockholder or any of its
Affiliates or Associates or to any Person if the Rights held by such Person are
Beneficially Owned by a 15% Stockholder or any of its Affiliates or Associates.
Any determination made by the Board of Directors of the Company as to whether
any Common Shares are or were Beneficially Owned at any time by a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
(h) If the Company purchases or otherwise acquires any Common Shares after
the Record Date and prior to the Distribution Date, any Rights associated with
the Common Shares so acquired shall be deemed canceled and retired, so that the
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Company shall not be entitled to exercise any Rights associated with the Common
Shares so acquired.
Section 4. Form of Right Certificates.
--------------------------
The Right Certificates and the form of assignment and the form of election
to purchase printed on the reverse thereof, when, as and if issued, shall be
substantially the same as Exhibit A hereto, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange upon which the Rights or the securities
of the Company issuable upon exercise of the Rights may from time to time be
listed, or to conform to usage. Subject to Section 22 hereof, Right
Certificates, whenever issued, that are issued in respect of Common Shares that
were issued and outstanding as of the Close of Business on the Distribution
Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either manually
or by facsimile signature, and may have affixed thereto the Company's seal or a
facsimile thereof attested by its Secretary or any Assistant Secretary, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company. Any Right Certificate may be signed on behalf of the Company by
any person who at the actual date of such execution shall be a proper officer of
the Company to sign such Right Certificate, even though such person was not such
an officer at the date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept at its principal offices books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
- ---------------------------------------------------------------------
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at any
time after the Close of Business on the Distribution Date, and so long as the
Rights represented thereby remain outstanding, any one or more Right
Certificates may be
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<PAGE>
transferred, split-up, combined or exchanged for one or more Right Certificates
representing the same aggregate number of Rights as the Right Certificates
surrendered. Any registered holder desiring to transfer, split up, combine or
exchange one or more Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
with the form of assignment, including certificate, on the reverse side thereof
completed and duly executed, with signature guaranteed. Thereupon, the Rights
Agent shall countersign and deliver to the person entitled thereto one or more
Right Certificates, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated, the Company shall issue and deliver to the
Rights Agent for delivery to the record holder of such Right Certificate a new
Right Certificate of like tenor in lieu of such lost, stolen, destroyed or
mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the Rights
Agent shall not countersign and deliver a Right Certificate to any Person if
such Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d)
hereof.
Section 7. Exercise of Rights.
------------------
(a) Prior to the Close of Business on the Distribution Date, no Right may
be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of this
Agreement, at any time after the Close of Business on the Distribution Date and
prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, with signature guaranteed,
to the Rights Agent at the office of the Rights Agent at Suite 200, 1745 Gardena
Avenue, Glendale, California 91204, together with payment of the Exercise Price
for each Right exercised. Upon the exercise of an exercisable Right and payment
of the Exercise Price in accordance with the provisions of this Agreement, the
holder of such Right shall be entitled to receive, subject to adjustment as
provided herein, one one-hundredth of a Preferred Share (or, following the
occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares,
other securities, other property, or some combination thereof).
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<PAGE>
(c) The "Exercise Price" for the exercise of each Right shall initially be
$30.00 and shall be payable in lawful money of the United States of America in
accordance with Section 7(f) hereof. The Exercise Price and the number of
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the earlier of the date of the first Section 11(a)(ii) Event or the date
of the first Section 13(a) Event, any Rights that are or were Beneficially Owned
by a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder at any
time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder) shall thereafter
have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred Shares that would otherwise be issuable (after
the Close of Business on the Distribution Date) upon the exercise of each Right
and payment of the Exercise Price (i) cash, (ii) other equity securities of the
Company, (iii) debt securities of the Company, (iv) other property or (v) any
combination of the foregoing, in each case having an aggregate Current Market
Price equal to the aggregate Current Market Price of the Preferred Shares for
which substitution is made. Subject to Section 7(d) hereof, in the event that
the Company takes any action pursuant to this Section 7(e), such action shall
apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase, including certification, completed and
duly executed, with signature guaranteed, accompanied by payment of the Exercise
Price for each Right to be exercised and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check or cashier's check payable
to the order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from the transfer agent of the Preferred Shares (or, following the
occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares
and/or securities) certificates for the number of Preferred Shares (or such
other securities) to be purchased, and the Company hereby irrevocably authorizes
such transfer agent to comply with all such requests, and/or, as provided in
Section 14 hereof, requisition from the depositary agent described therein
depositary receipts representing such number of one-hundredths of a Preferred
Share (or such other securities) as are to be purchased (in which case
certificates for the Preferred Shares (or such other securities) represented by
such receipts shall be deposited by the transfer agent with such depositary
agent) and the Company hereby directs such depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional Preferred Shares (or such other
securities) in accordance with Section 14 hereof, (iii) after receipt
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<PAGE>
of such certificates, depositary receipts or cash, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify under the
Securities Act and any applicable securities law of any jurisdiction the
Preferred Shares or other securities to be issued pursuant to the exercise of
the Rights; provided, however, that nothing contained in this Section 7 shall
relieve the Company of its obligations under Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights represented thereby, a new Right Certificate
representing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate or
to such holder's duly authorized assigns, subject to the provisions of Section
14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
--------------------------------------------------
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Sections 7(e) and 9(f) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued equity securities held in its treasury),
the number of such equity securities that will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the Rights
are listed on any national securities exchange, the Company shall use its best
efforts, from and after such time as the Rights become exercisable, to cause all
such securities issued or reserved for such issuance to be listed on such
exchange upon official notice of issuance following such exercise.
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<PAGE>
(c) If necessary to permit the issuance of securities upon exercise of the
Rights, the Company shall use its best efforts, from and after the Distribution
Date, to register and qualify such securities under the Securities Act, the
Exchange Act and any other applicable securities laws and to keep such
registration effective until the earlier of the Redemption Date or the
Expiration Date.
(d) The Company shall take all such action as may be necessary to ensure
that all securities delivered upon exercise of the Rights shall, at the time of
delivery of the certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
non-assessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
Section 10. Securities Record Date.
----------------------
Each Person in whose name any certificate for securities of the Company is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
representing such Rights was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the 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 securities transfer books of the
Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon
------------------------------------------------------------
Exercise of Rights or Number of Rights.
- --------------------------------------
The Exercise Price, the number and kind of securities that may be purchased
upon exercise of a Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
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<PAGE>
(a)(i) In the event that the Company shall at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date (A) declare or pay any
dividend on the Preferred Shares payable in Preferred Shares or Voting Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue
Preferred Shares or other securities of the Company (other than those for which
an adjustment is required under Section 11(b) hereof) in a reclassification of
the Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) or in a reorganization of the Company, then, and upon each such
event, the number and kind of Preferred Shares or other securities issuable upon
the exercise of a Right on the date of such event shall be proportionately
adjusted so that the holder of any Right exercised on or after such date shall
be entitled to receive, upon the exercise thereof and payment of the Exercise
Price, the aggregate number and kind of Preferred Shares or other securities or
other property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was exercisable and
the transfer books of the Company were open, such holder would have owned upon
such exercise and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs that
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 that at any time after the Close of Business on
the Record Date a 15% Ownership Date shall have occurred and neither the
Redemption Date nor the Expiration Date shall have occurred prior to the tenth
Business Day following such 15% Ownership Date (a "Section 11(a)(ii) Event"),
then, and upon each such Section 11(a)(ii) Event, proper provision shall be made
so that, except as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement and payment of the then current Exercise Price,
such number of Common Shares of the Company as shall equal the result obtained
by (A) multiplying the then current Exercise Price by the then number of one-
hundredths of a Preferred Share for which a Right was exercisable immediately
prior to such Section 11(a)(ii) Event (or, if the Distribution Date shall not
have occurred prior to the date of such Section 11(a)(ii) Event, the number of
one-hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event), and (B)
dividing that product by 50% of the Current Market Price of a Common Share on
the date of occurrence of the relevant Section 11(a)(ii) Event (such number of
shares being hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a Section
11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event
the aggregate number of Common Shares that are authorized by the Company's
Certificate of Incorporation, as amended from time to time, but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights is
less than the aggregate number of Adjustment Shares thereafter issuable upon the
exercise in full of the Rights
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<PAGE>
in accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being hereinafter
referred to as the "Unavailable Adjustment Shares"), then, and upon each such
event, the Company shall substitute for the pro rata portion of the Unavailable
Adjustment Shares that would otherwise be issuable thereafter upon the exercise
of each Right and payment of the Exercise Price (A) cash, (B) other equity
securities of the Company (including, without limitation, shares of preferred
stock of the Company or units of such shares having the same Current Market
Price as one Common Share (a "Common Share Equivalent")), (C) debt securities of
the Company, (D) other property or (E) any combination of the foregoing, in each
case having an aggregate Current Market Price equal to the aggregate Current
Market Price of the Unavailable Adjustment Shares for which substitution is
made. Subject to Section 7(d) hereof, in the event that the Company takes any
action pursuant to this Section 11(a)(iii), such action shall apply uniformly to
all outstanding Rights.
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current Market Price, and the denominator of
which shall be equal to the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or Preferred
Share Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); provided,
however, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of a
specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment shall
be made as if the record date for the issuance of such rights, options or
warrants had been the business day immediately preceding the date upon which
such rights, options or warrants became exercisable. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment to the Exercise Price 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 Exercise Price shall be adjusted
to be the Exercise Price that would then be in effect if such record date had
not been fixed.
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<PAGE>
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of assets (other than a distribution for
which an adjustment is required under Section 11(a)(i) or (b) hereof or a
regular quarterly cash dividend), then the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be equal to the excess of the Current Market Price per Preferred Share on
such record date over and above the fair market value of the portion of the
securities or assets to be so distributed with respect to one Preferred Share,
and the denominator of which shall be equal to such Current Market Price per
Preferred Share. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the then
current Exercise Price; provided, however, that any adjustments that by reason
of this Section 11(e) are not required to be made shall be cumulated 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-thousandth of a
Common Share or other share or one-millionth of a Preferred Share, as the case
may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right shall, upon exercise thereof, be entitled to receive any
securities of the Company other than Preferred Shares, and if an event occurs in
respect of such securities that, if it were to occur in respect of Preferred
Shares, would require an adjustment under this Section 11 in respect of
Preferred Shares, then the number of such other securities so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to Preferred Shares contained in this Section 11, and the other
provisions of this Agreement with respect to Preferred Shares shall apply on
like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
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<PAGE>
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) below, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter represent
the right to purchase, at the adjusted Exercise Price, that number of one-
hundredths of a Preferred Share (calculated to the nearest one-millionth of a
Preferred Share) obtained by multiplying (i) the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of the
Exercise Price, to adjust the number of Rights instead of making any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one one-thousandth of a Right)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right 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 Right Certificates on such record date Right Certificates
representing, 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, cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of such adjustment, and upon surrender thereof if required by the Company,
new Right Certificates representing all the Rights to which such holders shall
be entitled after such adjustment. Right 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 Exercise Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one-hundredths of a Preferred Share issuable upon the exercise of one
Right, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
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<PAGE>
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer, until the occurrence of such event, the
issuance to the holder of any Right exercised after such record date of the
number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of one-
hundredths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
Company in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly
for cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to in Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earliest
of the date of the first Section 11(a)(ii) Event, the date of the first Section
13(a) Event, the Redemption Date or the Expiration Date, (i) pay any dividend on
the Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares, (iii) combine the outstanding Common Shares into a smaller number
of Common Shares or (iv) issue Common Shares in a reclassification of the Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
then, and upon each such event, the Exercise Price to be in effect after such
event shall be determined by multiplying the Exercise Price in effect
immediately prior to such event by a fraction, the numerator of which shall be
equal to the number of Common Shares outstanding immediately prior to such event
and the denominator of which shall be equal to the number of Common Shares
outstanding immediately after such event. Successive adjustments shall be made
pursuant to this Section 11(n) each time such a dividend is paid or such a
subdivision, combination or reclassification is effected. If an event occurs
that would
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require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
----------------------------------------------------------
Issuable Upon Exercise of Rights.
- --------------------------------
Whenever an adjustment is made as provided in Section 11 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief statement of the facts giving rise to such adjustment, (b) file with the
Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate and (c) mail a brief summary
thereof to each holder of Rights in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or to give such notice shall not affect the validity or the force
and effect of such adjustment. Any adjustment to be made pursuant to Sections
11 or 13 hereof shall be effective as of the date of the event giving rise to
such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power.
- -----
(a) In the event (a "Section 13(a) Event") that, at any time on or after
the 15% Ownership Date and prior to the earlier of the Redemption Date or the
Expiration Date, (1) the Company shall, directly or indirectly, consolidate with
or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (2) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly-owned
Subsidiaries (such Persons, together with the Persons described in clauses (1)
and (2) above shall be collectively referred to in this Section as the
"Surviving Person"), then, and in each such case, proper provision shall be made
so that:
(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then current
Exercise Price, in lieu of the securities or other property otherwise
purchasable upon such exercise, such number of validly authorized and issued,
fully paid and non-assessable Common Shares of the Surviving Person (and if such
Surviving Person has more than one class or series of Common Shares, such number
of validly authorized and issued, fully paid and non-assessable Common Shares of
each series or class) as shall be equal to a fraction, the numerator of which is
the product of the then current Exercise Price
-18-
<PAGE>
multiplied by the number of one-hundredths of a Preferred Share purchasable upon
the exercise of one Right immediately prior to the first Section 13s(a) Event
(or, if the Distribution Date shall not have occurred prior to the date of such
Section 13(a) Event, the number of one-hundredths of a Preferred Share that
would have been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 13(a) Event, or, if
a Section 11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share purchasable upon
the exercise of a Right (or, if the Distribution Date shall not have occurred
prior to the date of such Section 11(a)(ii) Event, the number of one-hundredths
of a Preferred Share that would have been so purchasable if the Distribution
Date had occurred on the Business Day immediately preceding the date of such
Section 11(a)(ii) Event) immediately prior to such Section 11(a)(ii) Event,
multiplied by the Exercise Price in effect immediately prior to such Section
11(a)(ii) Event), and the denominator of which is 50% of the Current Market
Price per Common Share of the Surviving Person on the date of consummation of
such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
the Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to ensure that the provisions hereof shall thereafter be applicable to
its Common Shares thereafter deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the sale
or transfer in one or more transactions of assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), but less than 100% thereof, then each Person acquiring all
or a portion thereof shall assume the obligations of the Company as to a
fraction of each of the Rights equal to the fraction of the assets of the
Company and its Subsidiaries (taken as a whole) acquired by such Person, and the
obligations of the Company as to the remaining fraction of each of the Rights
shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that,
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<PAGE>
as soon as practicable after the date of consummation of such Section 13(a)
Event, such Surviving Person shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing, use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with all
applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that represent fractional Rights. If the Company
shall determine not to issue such fractional Rights, the Company shall pay to
the registered holders of the Right Certificates with respect to which such
fractional Rights would otherwise be issuable, at the time such fractional
Rights would otherwise have been issued as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Right on the
Business Day immediately prior to the date upon which such fractional Rights
would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common Shares
or Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of Rights, or to distribute
certificates that represent fractional Common Shares or Preferred Shares (other
than fractions that are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-hundredth
of a Preferred
-20-
<PAGE>
Share may, at the election of the Company, be represented by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of Preferred Shares.
If the Company shall determine not to issue fractional Common Shares or
Preferred Shares (or depositary receipts in lieu of Preferred Shares), the
Company shall pay to the registered holders of Right Certificates with respect
to which such fractional Common Shares or Preferred Shares would otherwise be
issuable, at the time such Rights are exercised as provided herein, an amount in
cash equal to the same fraction of the Current Market Price of a whole Common
Share or Preferred Share, as the case may be. For purposes of this Section
14(b), the Current Market Price of a whole Common Share or Preferred Share shall
be the Closing Price per share for the Trading Day immediately prior to the date
of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
Section 15. Rights of Action.
----------------
All rights of action in respect of this Agreement, except the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates and certificates for
Common Shares representing Rights, and any registered holder of any Right
Certificate or of such certificate for Common Shares, without the consent of the
Rights Agent or of the holder of any other Right Certificate or any other
certificate for Common Shares may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights represented by such Right Certificate
or by such certificate for Common Shares in the manner provided in such
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, and
injunctive relief against actual or threatened violations, of the obligations of
any Person under this Agreement.
Section 16. Agreement of Right Holders.
--------------------------
Every holder of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
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<PAGE>
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Stockholder.
- -----------
No holder, as such, of any Right or Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
securities of the Company that may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent as compensation for all
services rendered by it hereunder reasonable and customary fees and expenses.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross
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.
(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 Right Certificate or
certificate for Preferred Shares or Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of its counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
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<PAGE>
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. If, at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificate and in
this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificate 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 Right Certificates, by their acceptance of the Rights, shall
be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
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<PAGE>
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming null and void pursuant to Section 7(d)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 7, 11, 13 and 23 hereof, or
the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate, or as to whether any Preferred Shares or Common Shares or
other securities will, when issued, be validly authorized and issued, fully paid
and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, 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 the 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.
-24-
<PAGE>
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30-days' notice in writing mailed to
the Company and to each transfer agent of the Common Shares and Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30-days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting as
such, the Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the Company
shall become the Rights Agent and the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be a corporation organized and doing business under the
laws of the United States or of the States of New York or California (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York or State of
California), in good standing, having a principal office in New York or
California, that is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. 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 of this Agreement and so that the successor Rights Agent may
appropriately act as Rights Agent hereunder. Not later than the effective date
of any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
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<PAGE>
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option, issue new Right
Certificates in such form as may be approved by the Board of Directors in order
to reflect any adjustment or change in the Exercise Price and the number or kind
or class of shares or other securities or property purchasable upon exercise of
the Rights in accordance with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, the Board of Directors of the Company may, at its option, authorize and
direct the redemption of all, but not less than all, of the then outstanding
Rights at a redemption price of $.001 per Right, as such redemption price shall
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights.
(b) Immediately upon the action of the Board of Directors of the Company
authorizing and directing the redemption of the Rights pursuant to subsection
(a) of this Section 23, or at such time and date thereafter as it may specify,
and without any further action and without any notice, the right to exercise
Rights shall terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Within ten (10) Business Days after
the date of such action, the Company shall give notice of such redemption to the
holders of Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives such notice, but
neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of such redemption. Each such notice of redemption
shall state the method by which the payment of the Redemption Price will be
made. Neither the Company nor any of its Affiliates or Associates may, directly
or indirectly, redeem, acquire or purchase for value any Rights in any manner
other than that specifically set forth in Section 24 hereof or in this Section
23, or in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. Exchange of Rights.
------------------
-26-
<PAGE>
(a) At any time during the period of 180 days after a Section 11(a)(ii)
Event, the Board of Directors of the Company may, at its option, authorize and
direct the exchange of all, but not less than all, of the then outstanding and
exercisable Rights for that number of Common Shares, one one-hundredths of
Preferred Shares, other equity or debt securities of the Company, other
property, or any combination of the foregoing (the "Exchange Ratio"), in each
case having an aggregate Current Market Price equal to the remainder calculated
by subtracting (i) the Exercise Price on the record date for such exchange from
(ii) the product obtained by multiplying the Current Market Price per Common
Share on the record date for such exchange by the number of Common Shares for
which a Right is exercisable on such record date, and the Company shall so
exchange the Rights.
(b) Immediately upon the action of the Board of Directors of the Company
authorizing and directing the exchange of the Rights pursuant to subsection (a)
of this Section 24, or at such time and date thereafter as it may specify, and
without any further action and without any notice, the right to exercise Rights
shall terminate and the only right thereafter of the holders of Rights shall be
to receive a number of Common Shares, one one-hundredths of Preferred Shares,
debt securities of the Company, other property, or any combination of the
foregoing in accordance with the Exchange Ratio. Within ten (10) Business Days
after the date of such action, the Company shall give notice of such exchange to
the holders of Rights by mailing such notice to all holders of Rights at their
last addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives such notice, but
neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of such exchange. Each such notice of exchange shall
state the method by which the Rights will be exchanged for Common Shares.
(c) Notwithstanding the foregoing, in the event that the aggregate number
of Common Shares that are authorized by the Company's Certificate of
Incorporation, as amended from time to time, but not outstanding or reserved for
issuance for purposes other than upon exercise or exchange of the Rights is less
than the aggregate number of Common Shares issuable upon the exchange of the
Rights in accordance with this Section 24 (the excess of such number of
authorized Common Shares over and above such number of issuable Common Shares
being hereinafter referred to as the "Unavailable Exchange Shares"), then the
Company shall substitute for the pro rata portion of the Unavailable Exchange
Shares that would otherwise be issuable upon the exchange of the Rights in
accordance with this Section 24 (i) cash, (ii) other equity securities of the
Company (including, without limitation, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination of the
foregoing, in each case having an aggregate Current Market Price equal to the
aggregate Current Market Price of the Unavailable Exchange Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
Company takes any action pursuant to this Section 24, such action shall apply
uniformly to all outstanding Rights.
Section 25. Notice of Certain Events.
------------------------
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<PAGE>
(a) In the event that the Company shall propose (i) to declare or pay any
dividend on or make any distribution with respect to its Common Shares or
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Common Shares or Preferred Shares options, rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification involving only the subdivision of outstanding shares), (iv)
to effect any consolidation or merger with or into, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then and in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action that shall specify the record date for the
purpose of such dividend or distribution, or the date upon 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 record of the Common Shares or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares or Preferred Shares, whichever date
shall be the earlier. The failure to give the notice required by this Section
25 or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each Section
13(a) Event, the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, specifying the event and the consequences of the
event to holders of Rights under Sections 11 and 13 hereof.
Section 26. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
BioLase Technology, Inc.
981 Calle Amanecer
San Clemente, California 92673
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by
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<PAGE>
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) to the principal office of the Rights Agent as
follows:
U. S. Stock Transfer Corporation
Suite 200
1745 Gardena Avenue
Glendale, California 91204
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
(a) The Board of Directors of the Company may, from time to time, without
the approval of any holders of Rights, supplement or amend any provision of this
Agreement in any manner, whether or not such supplement or amendment is adverse
to any holder of Rights, and direct the Rights Agent so to supplement or amend
such provision, and the Rights Agent shall so supplement or amend such
provision; provided, however, that from and after the earliest of (i) the date
of the first Section 11(a)(ii) Event, (ii) the date of the first Section 13(a)
Event, (iii) the Redemption Date or (iv) the Expiration Date, this Agreement
shall not be supplemented or amended in any manner that would materially and
adversely affect any holder of outstanding Rights other than a 15% Stockholder
or a Surviving Person.
(b) From and after the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event and prior to the Rights
Expiration Date, the Company shall not effect any amendment to the Certificate
of Designations for the Preferred Shares that would materially and adversely
affect the rights, privileges or preferences of the Preferred Shares without the
prior approval of the holders of two-thirds or more of the then outstanding
Rights.
Section 28. Certain Covenants.
-----------------
Subject to Section 27 hereof and the other provisions of this Agreement,
from and after the earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event and prior to the earlier of the
Redemption Date or the Expiration Date, the Company shall not (a) issue or sell,
or permit any Subsidiary to issue or sell, to a 15% Stockholder or a Surviving
Person, or any Affiliate or Associate of a 15% Stockholder or a Surviving
Person, or any Person holding Voting Shares of the Company that are Beneficially
Owned by a 15% Stockholder or a Surviving Person, (i) any rights, options,
warrants or convertible securities on terms similar to, or that materially
adversely affect the value of, the Rights or (ii) Preferred Shares, Common
Shares or shares of any other class of capital stock, if such sale is intended
to or would materially adversely affect the value of the Rights, or (b) take any
other action that is intended to or would materially adversely affect the value
of the Rights.
-29-
<PAGE>
Section 29. 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 30. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (other than those representing Rights that have become null and
void) and the certificates for Common Shares representing Rights (other than
those Rights that have become null and void) any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and such registered
holders of Right Certificates and certificates for Common Shares representing
Rights.
Section 31. Severability.
------------
If any term, provision, covenant or restriction of this Agreement is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 32. Governing Law.
-------------
This Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts made and performed entirely within such state.
Section 33. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each such
counterpart shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
--------------------
Descriptive headings of the several sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BIOLASE TECHNOLOGY, INC.
Attest:
By: /s/ Stephen R. Tartamella By: /s/ Jeffrey W. Jones
--------------------------- ------------------------------
Name: Stephen R. Tartamella Name: Jeffrey W. Jones
Title: Secretary Title: Chief Executive Officer
U. S. STOCK TRANSFER CORPORATION
Attest:
By: /s/ Enrique Artaza By: /s/ Richard C. Brown
---------------------------- -----------------------------
Name: Enrique Artaza Name: Richard C. Brown
Title: Senior Vice President Title: Vice President
-31-
<PAGE>
EXHIBIT A
Form of Right Certificate
Certificate No. _________ __________Rights
NOT EXERCISABLE UNTIL THE OCCURRENCE OF CERTAIN EVENTS SPECIFIED IN THE RIGHTS
AGREEMENT HEREIN DESCRIBED OR AFTER THE LATER OF DECEMBER 31, 2008 OR THE TENTH
ANNIVERSARY OF THE "DISTRIBUTION DATE" (AS THAT TERM IS DEFINED IN THE RIGHTS
AGREEMENT HEREAFTER REFERRED TO), UNLESS EARLIER REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AS SPECIFIED IN THE RIGHTS AGREEMENT.
AS SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY A "15%
STOCKHOLDER" (AS THAT TERM IS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS SHALL BECOME AND THEREAFTER BE NULL AND VOID.
_________________________________
RIGHT CERTIFICATE
_________________________________
This certifies that _______________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of December 31, 1998 (the "Rights Agreement") between BioLase
Technology, Inc., a Delaware corporation (the "Company"), and U. S. Stock
Transfer Corporation, a California corporation (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (New York time) on the
later of December 31, 2008 or the tenth anniversary of the Distribution Date at
the office or agency of the Rights Agent at Suite 200, 1745 Gardena Avenue,
Glendale, California 91204 or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid non-assessable share of Series B Junior
Participating Cumulative Preferred Stock, par value $0.001 per share (the
"Preferred Shares"), of the Company, at a purchase price of $_____ per one one-
hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase
properly
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<PAGE>
completed and duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
one one-hundredths of a Preferred Share set forth above, are the number and
Purchase Price as of ______________, ____, based on the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of
Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the occurrence of certain events. This Right Certificate is subject to all
of the terms, provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent at Suite 200, 1745 Gardena
Avenue, Glendale, California 91204 may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised. Pursuant to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be, but are not required to be, redeemed by
the Company at a redemption price of $.001 per Right.
No fractional Preferred Shares 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 Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Preferred Shares or of any
other securities of
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<PAGE>
the Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right 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 ________, ____.
BIOLASE TECHNOLOGY, INC.
Attest:
By: By:
Title: Title:
Countersigned:
U.S. STOCK TRANSFER CORPORATION
By:
Authorized Officer
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<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ____________________________________________ hereby
sells, assigns and transfers unto ______________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated:______________,_____ _____________________________________
(Signature of Holder)
Signature Guaranteed:
________________________________________________________________________________
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by a "15% Stockholder" or an "Affiliate"
or "Associate" thereof (as defined in the Rights Agreement).
_____________________________________
(Signature of Holder)
________________________________________________________________________________
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<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
TO BIOLASE TECHNOLOGY, INC.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:______________, ____ _________________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of this
Right Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
-36-
<PAGE>
Form of Reverse Side of Right Certificate -- continued
Signature Guaranteed:
________________________________________________________________________________
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an "15% Stockholder" or an "Affiliate"
or "Associate" thereof (as such terms are defined in the Rights Agreement).
_____________________________________
Signature
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Forms of Assignment
and Election is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be a 15% Stockholder 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 Right
Certificates issued in exchange for this Right Certificate.
-37-
<PAGE>
EXHIBIT B
---------
CERTIFICATE OF DESIGNATIONS
OF
SERIES B JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
BIOLASE TECHNOLOGY, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
BIOLASE TECHNOLOGY, INC., a Delaware corporation (the "Company"), hereby
certifies that the following resolution was adopted by the Board of Directors of
the Company, as contemplated by Section 151 of the General Corporation Law of
the State of Delaware, at a meeting duly called and held on December 18, 1998.
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Company (the "Board of Directors" or the "Board") in
accordance with the provisions of the Certificate of Incorporation, the Board of
Directors hereby creates a series of preferred stock of the Company and hereby
states and fixes the designation of and number of shares in such series and the
voting powers, preferences and relative, participating, optional or other
special rights, and qualifications, limitations and restrictions thereof, as
follows:
Series B Junior Participating Cumulative Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series B Junior Participating Cumulative Preferred Stock" (the
"Series B Preferred Stock") and the number of shares constituting the Series B
Preferred Stock shall be 500,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
B Preferred Stock with
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<PAGE>
respect to dividends, the holders of shares of Series B Preferred Stock, in
preference to the holders of shares of Common Stock, par value $0.001 per share
(the "Common Stock"), of the Company, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (i) $.25 per share
($1.00 per annum) or (ii) subject to the provision for adjustment hereinafter
set forth, one hundred (100) times the aggregate per share amount of all cash
dividends, and one hundred (100) times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such event the
amount to which the holder of each share of Series B Preferred Stock was
entitled immediately prior to such event under clause (ii) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The Company shall declare a dividend or distribution on the Series B
Preferred Stock as provided in paragraph (a) of this Section 2 immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in the
-------- -------
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.25 per share ($1.00
per annum) on the Series B Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the
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<PAGE>
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which event
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
B Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall cumulate but shall not bear interest.
Dividends paid on the shares of Series B Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series B Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred
-------------
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series B Preferred Stock shall entitle the holder thereof to one
hundred (100) votes on all matters submitted to a vote of the stockholders of
the Company.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designations creating a series of
preferred stock or any similar stock or by law, the holders of shares of Series
B Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Company having general voting rights shall vote together as
one class on all matters submitted to a vote of stockholders of the Company.
(c) Except as set forth herein, or as otherwise provided by law, holders
of Series B Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
(d) In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or
-40-
<PAGE>
lesser number of shares of Common Stock, then in each such event the aggregate
number of votes to which each holder of a share of Series B Preferred Stock was
entitled immediately prior to such event under subsection (a) above shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Company shall not, directly or indirectly:
(i) declare or pay dividends on, or make any other distributions
with respect to any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
with respect to any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series B Preferred
Stock, except dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company ranking junior
(both as to dividends and upon dissolution, liquidation or winding up) to the
Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock, or any shares of stock ranking on a
parity with the Series B Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
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<PAGE>
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration, directly or indirectly, any shares of
stock of the Company unless the Company could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
-----------------
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of preferred stock subject to
the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation, in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
---------------------------------------
dissolution or winding up of the Company, no distribution shall be made to: (i)
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock unless,
prior thereto, the holders of shares of Series B Preferred Stock shall have
received the greater of (A) $1.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, or (B) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to one hundred (100) times the
aggregate amount to be distributed per share to holders of shares of Common
Stock; or (ii) the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except distributions made ratably on the Series B Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up.
In the event the Company shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such event the aggregate amount to which each holder of a share of Series B
Preferred Stock was entitled immediately prior to such event under the proviso
in clause (i) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event, and the denominator of which is
the number of shares of
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Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger or Other. In the event the Company shall
------------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, or otherwise changed, then in any
such event each share of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to one hundred (100) times
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such event the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred Stock shall
-------------
not be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with respect to
----
the payment of dividends and the distribution of assets, junior to all series of
the Company's preferred stock whether issued before or after the issuance of the
Series B Preferred Stock, unless such series is specifically designated to be
junior to or on a parity with Series B Preferred Stock.
Section 10. Fractional Shares. Fractional shares of Series B Preferred
-----------------
Stock may be issued but, unless the Board of Directors of the Company shall
otherwise determine, only in multiples of one one-hundredths of a share. The
holder of any fractional share of Series B Preferred Stock shall be entitled to
receive dividends, participate in distributions, exercise voting rights and have
the benefit of all other powers, preferences and rights relating to Series B
Preferred Stock in the same proportion as such fractional share bears to a whole
share of Series B Preferred Stock.
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Section 11. Amendment. The Certificate of Incorporation of the Company
---------
shall not be amended in any manner that would materially alter or change the
powers, preferences or special rights of the Series B Preferred Stock without
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series B Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Company by its President and attested by its Secretary this 22nd day of
December, 1998.
By: /s/ Jeffrey W. Jones
--------------------
Jeffrey W. Jones
President
Attest:
/s/ Stephen R. Tartamella
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Stephen R. Tartamella
Secretary
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