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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12 (b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
INNERDYNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0431168
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(State of incorporation or organization) (IRS Employer
Identification No.)
1244 Reamwood Avenue, Sunnyvale, CA 94089
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
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Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 19, 1997, the Board of Directors of InnerDyne, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, $0.01 par value (the
"Common Shares"), of the Company. The dividend is payable on October 15, 1997
(the "Record Date") to stockholders of record as of the close of business on
that date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Participating Preferred
Stock, $0.01 par value, of the Company (the "Preferred Shares"), subject to
adjustment, at a price of $20.00 per share, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in
a Preferred Shares Rights Agreement (the "Rights Agreement") dated as of
September 19, 1997 between the Company and American Stock Transfer and Trust
Company, as the Rights Agent (the "Rights Agent").
The following is a general description only and is subject to the
detailed terms and conditions of the Rights Agreement. A copy of the Rights
Agreement, including the Certificate of Designation, the form of Rights
Certificate and the Summary of Rights to be provided to stockholders of the
Company, is attached as Exhibit 1 to this Registration Statement and is
incorporated herein by reference.
RIGHTS EVIDENCED BY COMMON SHARE CERTIFICATES
The Rights will not be exercisable until the Distribution Date (defined
below). Accordingly, Common Share certificates outstanding on the Record
Date will evidence the Rights related thereto, and Common Share certificates
issued after the Record Date will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender or transfer of any
certificates for Common Shares, even without notation or a copy of the
Summary of Rights being attached thereto, will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate.
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DISTRIBUTION DATE
The Rights will separate from the Common Shares, certificates for the
Rights ("Rights Certificates") will be issued and the Rights will become
exercisable upon the earlier of: (i) the close of business on the tenth day
(or such later date as may be determined by a majority of the Board of
Directors, excluding directors affiliated with the Acquiring Person, as
defined below (the "Continuing Directors")) following a public announcement
that a person or group of affiliated or associated persons has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Shares (an "Acquiring Person") or (ii) the close of
business on the tenth day (or such later date as may be determined by a
majority of the Continuing Directors) following the commencement of a tender
offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the outstanding
Common Shares. The earlier of such dates is referred to as the "Distribution
Date".
ISSUANCE OF RIGHTS CERTIFICATES, EXPIRATION OF RIGHTS
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights from and after the Distribution
Date. Unless otherwise determined by the Board of Directors, all Common
Shares issued prior to the Distribution Date will be issued with Rights.
Common Shares issued after the Distribution Date may be issued with Rights if
such shares are issued (i) upon the exercise, conversion or exchange of
securities issued after adoption of the Rights Agreement or (ii) pursuant to
the exercise of stock options or under any employee benefit plan or
arrangement. Except as otherwise determined by the Board of Directors, no
other Common Shares issued after the Distribution Date will be issued with
Rights. In addition, no Common Shares issued after the Distribution Date
will be issued with Rights if such issuance would result in (or create a
significant risk) (i) of material adverse tax consequences to the Company or
the person to whom such Rights Certificate would be issued or (ii) that such
options or plans would not qualify for
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otherwise available special tax treatment. The Rights will expire on
September 19, 2007 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by
the Company or expire upon consummation of certain mergers, consolidations or
sales of assets, as described below.
INITIAL EXERCISE OF THE RIGHTS
Following the Distribution Date, and until the occurrence of one of the
subsequent events described below, holders of the Rights will be entitled to
receive, upon exercise and the payment of $20.00 (the "Purchase Price") per
Right, one one-thousandth of a Preferred Share.
Exchange Provision
At any time after an Acquiring Person has become such and prior to the
Acquiring Person beneficially owning 15% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by the Acquiring Person or its affiliates), in whole or in
part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
RIGHT TO BUY COMMON SHARES AT HALF PRICE
Unless the Rights are earlier redeemed or exchanged, in the event that
an Acquiring Person becomes such, other than pursuant to a tender offer which
is made for all of the outstanding Common Shares and approved by a majority
of the Continuing Directors after determining that the offer is both adequate
and otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer"), then proper provision will be made so that each holder of
a Right which has not theretofore been exercised (other than Rights
beneficially owned by the Acquiring Person, which will thereafter be void)
will thereafter have the right to receive, upon exercise of a Right, a number
of Common Shares having a then current value equal to two times the Purchase
Price. In the event that the Company does not have a sufficient number of
Common Shares available, or the Board decides that such action is necessary
or appropriate and not contrary to the interests of Rights holders, the
Company may, among other things, instead substi-
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tute cash, assets or other securities for the Common Shares into which the
Rights would have otherwise been exercisable.
RIGHT TO BUY ACQUIRING COMPANY STOCK AT HALF PRICE
Similarly, unless the Rights are earlier redeemed or exchanged, in the
event that, after the Shares Acquisition Date (as defined below), (i) the
Company consolidates with or merges into another entity, (ii) another entity
consolidates with or merges into the Company or (iii) the Company sells or
otherwise transfers 50% or more of its consolidated assets or earning power,
proper provision must be made so that each holder of a Right which has not
theretofore been exercised (other than Rights beneficially owned by the
Acquiring Person, which will thereafter be void) will thereafter have the
right to receive, upon exercise, a number of shares of common stock of the
acquiring company having a then current value equal to two times the Purchase
Price (unless the transaction satisfies certain conditions and is consummated
with a person who acquired shares pursuant to a Permitted Offer, in which
case the Rights will expire).
ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price payable, the number of Rights and the number of
Preferred Shares, Common Shares or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution as set forth in the Rights Agreement. With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price.
RIGHTS AND PREFERENCES OF THE PREFERRED SHARES
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend
of 1,000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a
preferential liquidation payment equal to accrued but unpaid dividends plus
the greater of $1,000 per share and 1,000 times the aggregate per share
amount to be distributed to the holders of Common Shares. Each Preferred
Share will have 1,000 votes, voting together with the holders
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of Common Shares, except as required by law or the Certificate of
Determination of Rights, Preferences and Privileges of Series A Participating
Preferred Stock. In the event of any merger, consolidation or other
transaction in which Common Shares are changed or exchanged, each Preferred
Share will be entitled to receive 1,000 times the amount received per Common
Share. These rights are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights of the
Preferred Shares, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
REDEMPTION
At any time prior to the close of business on the earlier of (i) the
tenth day following the date (the "Shares Acquisition Date") of public
announcement that an Acquiring Person has become such or such later date as
may be determined by a majority of the Continuing Directors and publicly
announced by the Company or (ii) the Final Expiration Date of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of $0.01
per Right ("Redemption Price").
NO STOCKHOLDERS' RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company (other than any rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
AMENDMENT OF RIGHTS AGREEMENT
The provisions of the Rights Agreement may be supplemented or amended by
the Board of Directors in any manner prior to the Distribution Date without
the approval of Rights holders. After the Distribution Date, the provisions
of the Rights Agreement may be supplemented or amended by the Board in order
to (i) cure any ambiguity, defect or inconsistency, (ii) to make changes
which are deemed necessary or advisable and do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to lengthen
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(A) the time period governing redemption shall be made at such time as the
Rights are not redeemable, or (B) any other period unless for the purpose of
protecting, enhancing or clarifying the rights of, and/or benefits to, the
holders of Rights.
CERTAIN ANTI-TAKEOVER EFFECTS
The Rights approved by the Board are designed to protect and maximize
the value of the outstanding equity interests in the Company in the event of
an unsolicited attempt by an acquiror to take over the Company, in a manner
or on terms not approved by the Board of Directors. Takeover attempts
frequently include coercive tactics to deprive a corporation's Board of
Directors and its stockholders of any real opportunity to determine the
destiny of the corporation. The Rights have been declared by the Board in
order to deter such tactics, including a gradual accumulation of shares in
the open market of a 15% or greater position to be followed by a merger or a
partial or two-tier tender offer that does not treat all stockholders
equally. These tactics unfairly pressure stockholders, squeeze them out of
their investment without giving them any real choice and deprive them of the
full value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. The Rights are not exercisable in the event of a Permitted
Offer, as described above. The Rights may be redeemed by the Company at
$0.01 Right within ten days (or such later date as may be determined by a
majority of the Continuing Directors) after the accumulation of 15% or more
of the Company's outstanding Common Shares by a single acquiror or group.
Accordingly, the Rights should not preclude any merger or business
combination approved by the Board of Directors. Issuance of the Rights does
not in any way weaken the financial strength of the Company or interfere with
its business plans. The issuance of the Rights has no immediate dilutive
effect, will not affect reported earnings per share, should not be taxable to
the Company or to its stockholders and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors
believes that the Rights represent a sound and reasonable means of addressing
the complex issues of corporate policy created by the current takeover
environment. However, the Rights may have the effect of rendering more
difficult or
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discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group
that attempts to acquire the Company on terms or in a manner not approved by
the Company's Board of Directors, except pursuant to an offer conditioned
upon the negation, purchase or redemption of the Rights.
Item 2. EXHIBITS.
1. Preferred Shares Rights Agreement, dated as of September 19,
1997, between InnerDyne, Inc. and American Stock Transfer and
Trust Company, including the Certificate of Designation of
Rights, Preferences and Privileges of Series A Participating
Preferred Stock, the form of Rights Certificate and the
Summary of Rights attached thereto as Exhibits A, B and C,
respectively.
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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.
INNERDYNE, INC.
Date: September 22, 1997 By /s/ WILLIAM G. MAVITY
----------------------
President and Chief Executive Officer
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INNERDYNE, INC.
REGISTRATION STATEMENT ON FORM 8-A
EXHIBIT INDEX
Page Number Under
Exhibit Sequential Numbering
No. Exhibit System
1 Preferred Shares Rights Agreement, dated as
of September 19, 1997, between InnerDyne,
Inc. and American Stock Transfer and Trust
Company, including the Certificate of
Designation of Rights, Preferences and
Privileges of Series A Participating Preferred
Stock, the form of Rights Certificate and the
Summary of Rights attached thereto as
Exhibits A, B and C, respectively.
<PAGE>
INNERDYNE, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Rights Agent
PREFERRED SHARES RIGHTS AGREEMENT
Dated as of September 19, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. APPOINTMENT OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . 5
3. ISSUANCE OF RIGHTS CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 5
4. FORM OF RIGHTS CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 7
5. COUNTERSIGNATURE AND REGISTRATION . . . . . . . . . . . . . . . . . . . . 8
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. . . . . . . . . 8
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS . . . . . . 9
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES . . . . . . . . . . . 11
9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. . . . . . . . . . . . . 11
10. PREFERRED SHARES RECORD DATE . . . . . . . . . . . . . . . . . .12
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES . . . . . . . 20
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. . . . . . . . . . . . . . . . . 23
15. RIGHTS OF ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16. AGREEMENT OF RIGHTS HOLDERS. . . . . . . . . . . . . . . . . . . . . . . 24
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER . . . . . . . . . . . 24
18. CONCERNING THE RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . . . . 25
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. . . . . . . . 25
20. DUTIES OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 26
21. CHANGE OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 28
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. . . . . . . . . . . . . . . . . . . 28
23. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
24. EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
25. NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . . . . . 32
26. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
27. SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 32
28. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. . . . . . . . 33
30. BENEFITS OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 33
31. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
32. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
33. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
34. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBITS
Exhibit A Form of Certificate of Determination
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
</TABLE>
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PREFERRED SHARES RIGHTS AGREEMENT
Agreement, dated as of September 19, l997, between InnerDyne, Inc., a
Delaware corporation (the "COMPANY"), and American Stock Transfer and Trust
Company (the "RIGHTS AGENT").
On September 19, 1997 (the "RIGHTS DIVIDEND DECLARATION DATE"), the
Board of Directors of the Company authorized and declared a dividend of one
Preferred Share purchase right (a "RIGHT") for each Common Share (as
hereinafter defined) of the Company outstanding as of the Close of Business
(as hereinafter defined) on October 15, 1997 (the "RECORD DATE"), each Right
representing the right to purchase one one-thousandth of a share of Series A
Participating Preferred Stock (as such number may be adjusted pursuant to the
provisions of this Agreement), having the rights, preferences and privileges
set forth in the form of Certificate of Determination of Rights, Preferences
and Privileges of Series A Participating Preferred Stock attached hereto as
EXHIBIT A, upon the terms and subject to the conditions herein set forth, and
further authorized and directed the issuance of one Right (as such number may
be adjusted pursuant to the provisions of this Agreement) with respect to
each Common Share that shall become outstanding between the Record Date and
the earlier of the Distribution Date and the Expiration Date (as such terms
are hereinafter defined), and in certain circumstances after the Distribution
Date.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the Common Shares then outstanding, but shall not
include the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or of any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring
Person either (i) as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or
more of the Common Shares of the Company then outstanding; PROVIDED, HOWEVER,
that if a Person shall become the Beneficial Owner of 15% or more of the
Common Shares of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an Acquiring Person, or (ii) if within eight
days after such Person would otherwise become an Acquiring Person (but for
the operation of this clause (ii)), such Person notifies the Board of
Directors that such Person did so inadvertently and within two days after
such notification, such Person is the Beneficial Owner of less than 15% of
the outstanding Common Shares.
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(b) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
as in effect on the date of this Agreement.
(c) 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 thereunder (or any comparable or
successor law or regulation);
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed pursuant to
this Section l(c)(ii)(A) the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange or (2)
securities which a Person or any of such Person's Affiliates or Associates
may be deemed to have the right to acquire pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or more of
its Affiliates or Associates) if such agreement has been approved by the
Board of Directors of the Company prior to there being an Acquiring Person;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding; PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this Section
l(c)(ii)(B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso
to Section l(c)(ii)(B)) or disposing of any securities of the Company;
PROVIDED, HOWEVER, that in no case shall an officer or director of the
Company be deemed (x) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by reason of
actions undertaken by such persons in their capacity as officers or directors
of the Company or (y) the Beneficial Owner of securities held of record by
the trustee of any employee benefit plan of the Company or any Subsidiary of
the Company for the benefit of any employee of the Company or any Subsidiary of
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the Company, other than the officer or director, by reason of any influence
that such officer or director may have over the voting of the securities held
in the plan.
(d) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., New
York time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "COMMON SHARES" when used with reference to the Company shall
mean the shares of Common Stock of the Company, $0.01 par value. "COMMON
SHARES" when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(g) "CONTINUING DIRECTOR" shall mean (i) any member of the Board of
Directors of the Company, while a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate,
and who was a member of the Board prior to the date of this Agreement, or
(ii) any Person who subsequently becomes a member of the Board, while a
member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if such Person's nomination for
election or election to the Board is recommended or approved by a majority of
the Continuing Directors.
(h) "DISTRIBUTION DATE" shall mean the earlier of (i) the Close of
Business on the tenth day (or such later date as may be determined by action
of a majority of Continuing Directors then in office) after the Shares
Acquisition Date (or, if the tenth day after the Shares Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or
(ii) the Close of Business on the tenth day (or such later date as may be
determined by action of a majority of Continuing Directors then in office)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if, assuming the successful consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding.
(i) "EQUIVALENT SHARES" shall mean Preferred Shares and any other
class or series of capital stock of the Company that is entitled to
participate in dividends and other distributions, including distributions
upon the liquidation, dissolution or winding up of the Company, on a
proportional basis with the Common Shares. In calculating the number of any
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class or series of Equivalent Shares for purposes of Section 11 of this
Agreement, the number of shares, or fractions of a share, of such class or
series of capital stock that is entitled to the same dividend or distribution
as a whole Common Share shall be deemed to be one share.
(j) "EXPIRATION DATE" shall mean the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date, (iii) the
time at which the Board of Directors orders the exchange of the Rights as
provided in Section 24 hereof or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof.
(k) "FINAL EXPIRATION DATE" shall mean September 19, 2007.
(1) "PERMITTED OFFER" shall mean a tender offer for all outstanding
Common Shares made in the manner prescribed by Section 14(d) of the Exchange
Act and the rules and regulations promulgated thereunder; PROVIDED, HOWEVER,
that such tender offer occurs at a time when Continuing Directors are in
office and a majority of the Continuing Directors then in office has
determined that the offer is both adequate and otherwise in the best
interests of the Company and its stockholders (taking into account all
factors that such Continuing Directors deem relevant, including without
limitation prices that could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value).
(m) "PERSON" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(n) "PREFERRED SHARES" shall mean shares of Series A Participating
Preferred Stock of the Company.
(o) "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.
(p) "RECORD DATE" shall have the meaning set forth in the recitals
at the beginning of this Agreement.
(q) "REDEMPTION DATE" shall mean the time at which the Board of
Directors of the Company orders redemption of the Rights as provided in
Section 23 hereof.
(r) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.
(s) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set
forth in the recitals at the beginning of this Agreement.
(t) "SECTION 13 EVENT" shall mean any event described in clause
(i), (ii) or (iii) of Section 13(a) hereof.
(u) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
such; PROVIDED THAT, if such person is determined not to have
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become an Acquiring Person pursuant to Section l(a)(ii) hereof, then no
Shares Acquisition Date shall be deemed to have occurred.
(v) "SUBSIDIARY" of any Person shall mean any corporation or other
entity of which an amount of voting securities sufficient to elect a majority
of the directors or Persons having similar authority of such corporation or
other entity is beneficially owned, directly or indirectly, by such Person,
or any corporation or other entity otherwise controlled by such Person.
(w) "TOTAL EXERCISE PRICE" shall have the meaning set forth in
Section 4(a) hereof.
(x) "TRADING DAY" shall have the meaning set forth in Section 11(d)
hereof.
(y) A "TRIGGERING EVENT" shall be deemed to have occurred upon any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becoming an
Acquiring Person.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with the terms and conditions hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.
3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not
by separate Rights Certificates and (ii) the right to receive Rights
Certificates will be transferable only in connection with the transfer of
Common Shares. Until the earlier of the Distribution 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 associated with the
Common Shares represented thereby. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, 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 Rights Certificate in substantially the form of EXHIBIT B hereto
(a "RIGHTS CERTIFICATE"), evidencing one Right for each Common Share so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per Common Share has been made pursuant to Section
11(a)(i), Section 11(i) or Section 11(p) hereof, then at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in
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accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of one or more Common Shares, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders thereof.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights in substantially the form of
EXHIBIT C hereto (the "SUMMARY OF RIGHTS"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company.
(c) Unless the Board of Directors, by resolution adopted at or
before the time of the issuance (including pursuant to the exercise of rights
under the Company's benefit plans) of any Common Shares, specifies to the
contrary, Rights shall be issued in respect of all Common Shares that are
issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in Section
22 hereof, after the Distribution Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between InnerDyne and American Stock Transfer
and Trust Company as the Rights Agent, dated as of
September 19, 1997 (the "RIGHTS AGREEMENT"), the terms of
which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive
offices of InnerDyne. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. InnerDyne will mail to
the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor. Under certain circumstances set forth
in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the Company
purchases or acquires any Common Shares after the Record Date but prior to
the Distribution Date, any Rights associated with such Common Shares shall be
deemed canceled and retired so that the Company shall not
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be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
Common Shares and of assignment to be printed on the reverse thereof) shall
be substantially in the form of EXHIBIT B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and 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 on which the
Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date (or in the case of
Rights issued with respect to Common Shares issued by the Company after the
Record Date, as of the date of issuance of such Common Shares) and on their
face shall entitle the holders thereof to purchase such number of
one-thousandths of a Preferred Share as shall be set forth therein at the
price set forth therein (such exercise price per one one-thousandth of a
Preferred Share being hereinafter referred to as the "PURCHASE PRICE" and the
aggregate exercise price of all Preferred Shares issuable upon exercise of
one Right being hereinafter referred to as the "TOTAL EXERCISE PRICE"), but
the number and type of securities purchasable upon the exercise of each Right
and the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
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<PAGE>
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, its President
or any Vice President, either manually or by facsimile signature, and by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal (if
any) or a facsimile thereof. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates nevertheless, may be countersigned
by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights Certificates had
not ceased to be such officer of the Company; and any Rights Certificate may
be signed on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its office designated for such
purposes, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate
or Rights Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a Preferred
Share (or, following a Triggering Event, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect
to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to
the person entitled thereto a Rights Certificate or Rights Certificates, as
the case may
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be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one-thousandth of a Preferred
Share as to which the Rights are exercised, at or prior to the Expiration
Date.
(b) The Purchase Price for each one-thousandth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be $20.00 shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the number of one-thousandths of a
Preferred Share (or other securities or property, as the case may be) to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Rights Certificate in accordance with Section 9
hereof in cash, or by certified check or cashier's check payable to the order
of the Company, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer
agent for the Preferred Shares) a certificate or certificates for the number
of one-thousandths of a Preferred Share to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number
of one-thousandths of a Preferred Share issuable upon exercise of the Rights
hereunder with a depository agent, requisition from the depository agent of
depository receipts representing such number of one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depository agent) and the Company hereby directs the
depository agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
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lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depository receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt thereof, deliver such
cash to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced (including to zero) pursuant to Section 11(a)(iv) hereof) may be made
in cash or by certified check or cashier's check payable to the order of the
Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Rights
Certificate or to his or her duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Triggering Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (a "POST TRANSFEREE"),
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) (a "PRIOR TRANSFEREE") or (iv) any subsequent
transferee receiving transferred Rights from a Post Transferee or a Prior
Transferee, either directly or through one or more intermediate transferees,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use
all reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or to any other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or any
of such Acquiring Person's Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for
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such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of and to the extent
of its authorized and unissued shares of Preferred Stock not reserved for
another purpose (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Shares and/or other securities),
the number of Preferred Shares (and, following the occurrence of the
Triggering Event, Common Shares and/or other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares
on a national securities exchange, then so long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be
listed on a national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable
(but only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11(a)(iv) hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable after
such filing and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the date of expiration of the Rights.
The Company may temporarily suspend, for a period not to exceed
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ninety (90) days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare
and file such registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating,
and notify the Rights Agent, that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and notification to
the Rights Agent at such time as the suspension is no longer in effect. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction, unless the requisite qualification in such
jurisdiction shall have been obtained, or an exemption therefrom shall be
available, and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any Preferred Shares upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or depository
receipts for the Preferred Shares in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates or depository receipts
for Preferred Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for a number of one-thousandths of a Preferred Share is issued
upon the exercise of Rights shall for all purposes be deemed to have become
the holder of record of Preferred Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
multiplied by the number of one-thousandths of a Preferred Share with respect
to which the Rights have been exercised (and any applicable transfer taxes)
was made; PROVIDED, HOWEVER, that if the date of such surrender and payment
is a date upon which the Preferred Shares transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Shares transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
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11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares or other property covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares (by reverse stock split or otherwise) into a
smaller number of Common Shares, or (D) issue any shares of its capital stock
in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such
event, except as otherwise provided in this Section 11(a) and Section 7(e)
hereof: (1) each of the Rights outstanding at the time of the record date
for such dividend or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted to that number of Rights
(calculated to the nearest one ten-thousandth (1/10,000) of a Right) equal to
a fraction (the "EXCHANGE RATIO"), the numerator of which shall be the total
number of Common Shares or shares of capital stock issued in such
reclassification of the Common Shares outstanding immediately following such
time and the denominator of which shall be the total number of Common Shares
outstanding immediately prior to such time, and the number of Rights that
shall thereafter be issued with respect to each Common Share or share of such
other capital stock that shall become outstanding thereafter prior to the
Distribution Date shall be equal to the total number of outstanding Rights
immediately after such event (as adjusted pursuant to this clause (1))
divided by the total number of outstanding Common Shares or shares of such
other capital stock immediately after such event (subject to further
adjustment pursuant to the provisions of this Agreement); (2) the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
adjusted so that the Purchase Price thereafter shall equal the result
obtained by dividing the Purchase Price in effect immediately prior to such
time by the Exchange Ratio; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of Preferred Shares or shares
of such other capital stock issuable upon the exercise of each Right shall
remain unchanged immediately after such event, but, in the event of a
reclassification, the kind of shares issuable upon the exercise of each Right
immediately after such reclassification shall be adjusted to be the kind of
shares of such other capital stock issued in such reclassification, rather
than Preferred Shares. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this Agreement, in the
event a Triggering Event shall have occurred, then promptly
following such Triggering Event, proper provision shall be made so
that each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive for each Right,
upon exercise thereof in accordance with the terms of this
Agreement and payment of the then-current Total Exercise Price, in
lieu of a number of one-thousandths of a Preferred Share, such
number of Common Shares of the Com-
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<PAGE>
pany as shall equal the result obtained by multiplying the then-current
Purchase Price by the then number of one-thousandths of a Preferred Share for
which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first occurrence of
a Triggering Event, and dividing that product by 50% of the current per share
market price (determined pursuant to Section 11(d) hereof) for Common Shares
on the date of occurrence of the Triggering Event (such number of shares
being hereinafter referred to as the "ADJUSTMENT SHARES").
(iii) The right to buy Common Shares of the Company pursuant to
Section 11(a)(ii) hereof shall not arise as a result of any Person becoming
an Acquiring Person through an acquisition of Common Shares pursuant to a
Permitted Offer.
(iv) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if the Board of Directors
determines that such action is necessary or appropriate and not contrary to
the interest of holders of Rights (and, in the event that the number of
Common Shares which are authorized by the Company's Articles of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of
the Rights, or if any necessary regulatory approval for such issuance has not
been obtained by the Company, the Company shall): (A) determine the excess
of (1) the value of the Common Shares issuable upon the exercise of a Right
(the "CURRENT VALUE") over (2) the Purchase Price (such excess, the "SPREAD")
and (B) with respect to each Right, make adequate provision to substitute for
such Common Shares, upon exercise of the Rights, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of Preferred
Stock which the Board of Directors of the Company has deemed to have the same
value as Common Shares (such shares or units of shares of Preferred Stock are
herein called "COMMON STOCK EQUIVALENTS")), except to the extent that the
Company has not obtained any necessary stockholder or regulatory approval for
such issuance, (4) debt securities of the Company, except to the extent that
the Company has not obtained any necessary stockholder or regulatory approval
for such issuance, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; PROVIDED, HOWEVER, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first occurrence
of a Triggering Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the "SECTION 11(A)(II) TRIGGER DATE"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the extent
available), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the thirty
(30) day period set forth above may be extended to the extent necessary, but
not more
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<PAGE>
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent
that the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iv), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares, to take any action to obtain any
required regulatory approval and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iv),
the value of the Common Shares shall be the current per share market price
(as determined pursuant to Section 11(d) hereof) of the Common Shares on the
Section 11(a)(ii) Trigger Date and the value of any "COMMON STOCK EQUIVALENT"
shall be deemed to have the same value as the Common Shares on such date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants
to all holders of Common Shares or of any class or series of Equivalent
Shares entitling such holders (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase Common
Shares or Equivalent Shares or securities convertible into Common Shares or
Equivalent Shares at a price per share (or having a conversion price per
share, if a security convertible into Common Shares or Equivalent Shares)
less than the then current per share market price of the Common Shares or
Equivalent Shares (as defined in Section 11(d)) on such record date, then, in
each such case, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares and Equivalent Shares (if any) outstanding on such
record date, plus the number of Common Shares or Equivalent Shares, as the
case may be, which the aggregate offering price of the total number of Common
Shares or Equivalent Shares, as the case may be, so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which shall be the number of Common Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Common Shares
or Equivalent Shares, as the case may be, to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Common Shares and Equivalent 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 shall
be made successively whenever such a record date is fixed, and in the event
that such rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
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<PAGE>
(c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders
of the Common Shares or of any class or series of Equivalent Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend, if any, or a dividend payable in Common Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)),
then, in each such case, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
hereof) of a Common Share or an Equivalent Share on such record date, less
the fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Common Share or Equivalent Share, as the case may be, and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) of a Common Share or Equivalent Share on
such record date. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iv) hereof, the "CURRENT PER
SHARE MARKET PRICE" of any security (a "SECURITY" for the purpose of this
Section 11(d)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iv)
hereof, the "CURRENT PER SHARE MARKET PRICE" of any Security on any date
shall be deemed to be the average of the daily closing prices per share of
such Security for the ten (10) consecutive Trading Days immediately prior to
such date; PROVIDED, HOWEVER, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (i) a dividend or distribution
on such Security payable in shares of such Security or securities convertible
into such shares or (ii) any subdivision, combination or reclassification of
such Security, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The closing price for
each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed
or admitted to trading on any national securities exchange, the last sale
price or, if such last sale price is not reported, the average of the high
bid and low asked prices
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<PAGE>
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in the Common Shares, the fair value of such
shares on such date as determined in good faith by the Board of Directors of
the Company shall be used. The term "TRADING DAY" shall mean a day on which
the principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or so
listed or traded, "CURRENT PER SHARE MARKET PRICE" shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; PROVIDED,
HOWEVER, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a Common Share or
other share or one hundred-thousandth of a Preferred Share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right and if required, the Purchase Price thereof, shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Sections 11(a), (b), (c), (e), (h), (i), (j), (k), (1) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b), each
Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of Preferred Shares
(calculated to the nearest one hundred-thousandth of a share)
obtained by (i) multiplying (x) the number of Preferred Shares
covered by a Right immediately prior to this adjustment, by
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<PAGE>
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price as a result of the calculations made in Section 11(b) to
adjust the number of Rights, in substitution for 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-thousandths 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 ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of Preferred Shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-thousandth of a Preferred Share and
the number of one-thousandths of a Preferred Share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par or stated value, if any, of the
number of one-thousandths of a Preferred Share issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue as fully paid and nonassessable shares such number of
one-thousandths of a Preferred Share at such adjusted Purchase Price.
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<PAGE>
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the number of one-thousandths 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-thousandths of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
prior to the Distribution Date, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred or Common Shares, (ii) issuance
wholly for cash of any Preferred or Common Shares at less than the current
market price, (iii) issuance wholly for cash of Preferred or Common Shares or
securities which by their terms are convertible into or exchangeable for
Preferred or Common Shares, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred or Common Shares shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Triggering Event
or Section 13 Event, if (i) at the time or immediately after such Triggering
Event or Section 13 Event there are any rights, warrants or other instruments
or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (ii) prior to, simultaneously with or immediately after such
Section 13 Event, the stockholders of the Person who constitutes, or would
constitute, the "PRINCIPAL PARTY" for purposes of Section 13(b) hereof shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take
(or permit to be taken) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number
of Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such event, except as
otherwise provided in this Section 11 and Section 7(e) hereof: (1) each of
the
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<PAGE>
Rights outstanding at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted to that number of Rights (calculated to the nearest
one ten-thousandth (1/10,000) of a Right) equal to a fraction (the "EXCHANGE
FRACTION"), the numerator of which shall be the total number of Preferred
Shares or shares of capital stock issued in such reclassification of the
Preferred Shares outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares
outstanding immediately prior to such time, and the number of Rights that
shall thereafter be issued with respect to each Common Share or share of
other capital stock that shall be issued in a reclassification of the Common
Shares prior to the Distribution Date shall be equal to the total number of
outstanding Rights immediately after such event (as adjusted pursuant to this
clause (1)) divided by the total number of outstanding Common Shares or
shares of such other capital stock immediately after such event (subject to
further adjustment pursuant to the provisions of this Agreement); (2) the
Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification
shall be adjusted so that the Purchase Price thereafter shall equal the
result obtained by dividing the Purchase Price in effect immediately prior to
such time by the Exchange Fraction; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of one-thousandths of a
Preferred Share or share of such other capital stock issuable upon the
exercise of each Right shall remain unchanged immediately after such event,
but, in the event of a reclassification, the kind of shares issuable upon the
exercise of each Right immediately after such reclassification shall be
adjusted to be the kind of shares of such other capital stock issued in such
reclassification, rather than Preferred Shares.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Rights Certificate in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make
such certification or give such notice shall not affect the validity of such
adjustment or the force or effect of the requirement for such adjustment. The
Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment contained therein and shall not be deemed to have knowledge
of such adjustment unless and until it shall have received such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event that, following the Shares Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the
Company in a transaction the principal purpose of which is to
change the state of incorporation of the Company or which complies
with Section 11(o) hereof);
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<PAGE>
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger; or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its
wholly owned Subsidiaries in one or more transactions, each of which complies
with Section 11(o) hereof),
then, and in each such case, proper provision shall be made
so that
(A) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid and nonassessable Common Shares of the
Principal Party (as hereinafter defined), free of any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the
number of one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Triggering Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event by the Purchase Price in effect
immediately prior to such first occurrence) and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "TOTAL EXERCISE PRICE" for each Right and for all purposes
of this Agreement) by 50% of the current per share market price (determined
pursuant to Section 11(d) hereof) of the Common Shares of such Principal
Party on the date of consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;
(C) the term "COMPANY" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;
(D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares)
in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "PRINCIPAL PARTY" shall mean, in the case of any transaction
described in clause (i), (ii) or (iii) of Section 13(a), the Person referred
to therein or such Person's successor,
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<PAGE>
including, if applicable, the Company, if it is the surviving corporation),
PROVIDED, HOWEVER, that in any such case, (i) if such Person is a direct or
indirect Subsidiary of another Person, "PRINCIPAL PARTY" shall refer to such
other Person and (ii) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, "PRINCIPAL PARTY" shall refer to
whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate value, and PROVIDED, FURTHER, that for purposes of
transactions described in clause (iii) hereof, "PRINCIPAL PARTY" shall refer
to that Person receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions.
(c) If, for any reason, the Rights cannot be exercised for Common
Shares of such Principal Party as provided in Section 13(a), then each holder
of Rights shall have the right to exchange its Rights for cash from such
Principal Party in an amount equal to the number of Common Shares that it
would otherwise be entitled to purchase times 50% of the current per share
market price, as determined pursuant to Section 11(d) hereof, of such Common
Shares of such Principal Party. If, for any reason, the foregoing
formulation cannot be applied to determine the cash amount into which the
Rights are exchangeable, then the Board of Directors, based upon the advice
of one or more nationally recognized investment banking firms, and based upon
the total value of the Company, shall determine such amount reasonably and
with good faith to the holders of Rights. Any such determination shall be
final and binding on the Rights Agent.
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in clauses (i)
and (ii) of Section 13(a) if: (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a Permitted Offer
(or a wholly-owned Subsidiary of any such Person or Persons); (ii) the price
per share of Common Shares offered in such transaction is not less than the
price per share of Common Shares paid to all holders of Common Shares whose
shares were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration being offered to the remaining holders of Common Shares
pursuant to such transaction is the same form as the form of consideration
paid pursuant to such Permitted Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
(e) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have a sufficient number of authorized Common
Shares that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Principal
Party shall, upon consummation of such Section 13 Event, assume this
Agreement in accordance with Sections 13(a) and (b) hereof, that all rights
of first refusal or preemptive rights in respect of the issuance of Common
Shares of such Principal Party upon exercise of outstanding Rights have been
waived, that there are no rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights and that such transaction
shall not result in a default by such Principal Party under this Agreement,
and further providing that, as soon as practicable after the date of such
Section 13 Event, such Principal Party will:
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(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 and use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that at any time after the occurrence of a
Triggering Event some or all of the Rights shall not have been exercised at
the time of a transaction described in this Section 13, the Rights which have
not theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior adjustment
required by Section 11(a)(ii)).
(f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable, as determined pursuant
to the second sentence of Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions that are integral multiples of one one-thousandth of a
Preferred Share). In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a Common Share. For purposes of this
Section 14(b), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d) hereof) for the Trading Day immediately prior to
the date of such exercise.
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(c) The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his or her own behalf and for his or her own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his or her right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of any Rights
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, or to give or
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withhold consent to any corporate action, or 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, until
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it
in connection with, its administration of this Agreement in reliance upon any
Rights Certificate or certificate for the 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 counsel as set forth in Section 20 hereof.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stockholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto; PROVIDED, HOWEVER, that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of
the Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
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(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion or advice of such counsel
shall be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance with
such opinion or advice.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "CURRENT PER SHARE MARKET PRICE") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (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 execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after
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receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement
or any Rights Certificate or as to whether any Preferred Shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments 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, Chief Executive Officer, the President, any
Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent
in accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less than
five (5) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any 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 Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, 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 reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its
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duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his or her Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall either (a) be a corporation organized and doing business under the laws
of the United States or of any state of the United States, in good standing,
which is authorized under such laws to exercise corporate trust or
stockholder services powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million or (b) an
affiliate of such a corporation. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Shares and
the Common Shares, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new
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Rights Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect
to Common Shares so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of
the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; PROVIDED, HOWEVER, that (i)
no such Rights Certificate shall be issued and this sentence shall be null
and void AB INITIO if, and to the extent that, such issuance or this sentence
would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued or would create a significant risk of or result in such
options' or employee plans' or arrangements' failing to qualify for otherwise
available special tax treatment and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
23. REDEMPTION.
(a) The Company may, at its option and with the approval of the
Board of Directors, at any time prior to the Close of Business on the earlier
of (i) the tenth day following the Shares Acquisition Date or such later date
as may be determined by action of a majority of Continuing Directors then in
office and publicly announced by the Company or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being herein referred to as the "REDEMPTION
PRICE") and the Company may, at its option, pay the Redemption Price either
in Common Shares (based on the current per share market price thereof (as
determined pursuant to Section 11(d) hereof) at the time of redemption) or
cash; PROVIDED, HOWEVER, if the Board of Directors of the Company authorizes
redemption of the Rights on or after the time a Person becomes an Acquiring
Person, then there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such Continuing
Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within ten (10) days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives
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the notice. Each such notice of redemption will 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 redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and subject
to subsection (c) below, the Company may, at its option, by majority vote of
the Board of Directors and a majority vote of the Continuing Directors, at
any time after the occurrence of a Triggering Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "RATIO OF EXCHANGE"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number
of such Rights held by such holder multiplied by the Ratio of Exchange. The
Company shall give public notice of any such exchange; PROVIDED, HOWEVER,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange
of Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the
option of a majority of the Board of Directors, with respect to each Right
(i) pay cash in an amount equal to the Current Value (as hereinafter
defined), in lieu of issuing Common Shares in exchange therefor, or (ii)
issue debt or equity securities or a combination thereof, having a value
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equal to the Current Value, in lieu of issuing Common Shares in exchange for
each such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors by majority vote of the Board of Directors, or (iii) deliver any
combination of cash, property, Common Shares and/or other securities having a
value equal to the Current Value in exchange for each Right. For purposes of
this Section 24(c) only, the Current Value shall mean the product of the
current per share market price of Common Shares (determined pursuant to
Section 11(d) on the date of the occurrence of the event described above in
subparagraph (a)) multiplied by the number of Common Shares for which the
Right otherwise would be exchangeable if there were sufficient shares
available. To the extent that the Company determines that some action need
be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c), the
Board of Directors may temporarily suspend the exercisability of the Rights
for a period of up to sixty (60) days following the date on which the event
described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Shares and/or to decide the appropriate
form of distribution to be made pursuant to the above provision and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Common Shares.
In lieu of such fractional Common Shares, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal
to the same fraction of the current per share market value of a whole Common
Share (as determined pursuant to the second sentence of Section 11(d) hereof).
(e) The Company may, at its option, by majority vote of the Board
of Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors, based upon the advice of one or more nationally
recognized investment banking firms.
(f) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection (e) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection (e)
above. The Company shall give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common
Shares of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights will be effected.
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25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose to effect or permit to occur
any Section 13 Event, the Company shall give notice thereof to each holder of
Rights in accordance with Section 26 hereof at least twenty (20) days prior
to occurrence of such Section 13 Event.
(b) In case any Triggering Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Sections
11(a)(ii) and 13 hereof.
26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Rights Agent) as follows:
InnerDyne, Inc.
1244 Reamwood Avenue
Sunnyvale, California 94089
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 Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer and Trust Company
40 Wall Street
New York, New York 10005
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date, the
Company may supplement or amend this Agreement in any respect without the
approval of any holders of Rights and the Rights Agent shall, if the Company
so directs, execute such supplement or amendment. From and after the
Distribution Date, the Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any holders of
Rights in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) shorten or lengthen any time period hereunder
(which lengthening or shortening, following the first occurrence of an
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event set forth in clauses (i) and (ii) of the proviso to Section 23(a)
hereof, shall be effective only if there are Continuing Directors and shall
require the concurrence of a majority of such Continuing Directors) or (iv)
to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect
the interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); PROVIDED, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the Company
that states that the proposed supplement or amendment is in compliance with
the terms of this Section 27, the Rights Agent shall execute such supplement
or amendment. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of
Common Shares.
28. SUCCESSORS. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For all
purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (and, where specifically
provided for herein, the Continuing Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or the Company (or, where
specifically provided for herein, the Continuing Directors), or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem
or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board (or, where specifically provided for herein, by the
Continuing Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
Certificates and all other parties and (y) not subject the Board or the
Continuing Directors to any liability to the holders of the Rights.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
-33-
<PAGE>
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;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by
such court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the close of business
on the tenth day following the date of such determination by the Board of
Directors.
32. GOVERNING LAW. This Agreement and each Right and each Rights
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
to be made and performed entirely within such State.
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but
one and the same instrument.
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.
INNERDYNE, INC.
By: /s/ WILLIAM G. MAVITY
---------------------------------------
Name: William G. Mavity
Title: President and Chief Executive Officer
AMERICAN STOCK TRANSFER AND
TRUST COMPANY
By: /s/ HERBERT J. LEMMER
---------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
-35-
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF DETERMINATION
<PAGE>
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
INNERDYNE, INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
We, William G. Mavity and Craig W. Johnson, the President and Secretary,
respectively, of InnerDyne, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the said Corporation, the said Board of
Directors on September 19, 1997 adopted the following resolutions creating a
series of shares of Preferred Stock designated as Series A Participating
Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of
Directors does hereby provide for the issue of a series of Preferred Stock,
$0.01 par value, of the Corporation, to be designated "SERIES A PARTICIPATING
PREFERRED STOCK," initially consisting of 41,000 shares and to the extent
that the designations, powers, preferences and relative and other special
rights and the qualifications, limitations and restrictions of the Series A
Participating Preferred Stock are not stated and expressed in the Certificate
of Incorporation, does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights and
the qualifications, limitations and restrictions thereof, as follows (all
terms used herein which are defined in the Certificate of Incorporation shall
be deemed to have the meanings provided therein):
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Participating Preferred Stock," par value $0.01 per
share, and the number of shares constituting such series shall be forty one
thousand (41,000).
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends,
the holders of shares of Series A Participating Preferred Stock shall be
entitled to receive when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash
on the last day of March, June, September and December in each year (each
such date being referred to herein as a
<PAGE>
"QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 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 of the Corporation (the "COMMON STOCK") since
the immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Participating Preferred Stock. In
the event the Corporation shall at any time after September 19, 1997 (the
"RIGHTS DECLARATION DATE") (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case 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 A Participating 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 not bear interest. Dividends paid on the shares of
Series A Participating 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 A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for
the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:
-2-
<PAGE>
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the corporation.
(C) Except as required by law, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of
a share of Series A Participating Preferred Stock unless concurrently
therewith it shall declare a dividend on the Series A Participating Preferred
Stock as required by Section 2 hereof.
(B) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock;
(ii) declare or pay dividends on, make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with Series A
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
-3-
<PAGE>
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, PROVIDED THAT the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the Series A
Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series A Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Participating 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 determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(C) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A
Participating Preferred Stock shall have received an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment, plus an amount equal to the greater of (1) $1,000
per share, PROVIDED THAT in the event the Corporation does not have
sufficient assets, after payment of its liabilities and distribution to
holders of Preferred Stock ranking prior to the Series A Participating
Preferred Stock, available to permit payment in full of the $1,000 per share
amount, the amount required to be paid under this Section 6(A)(1) shall,
subject to Section 6(B) hereof, equal the value of the amount of available
assets divided by the number of outstanding shares of Series A Participating
Preferred Stock or (2) subject to the provisions for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount to be distributed to
the holders of Common Stock (the greater of (1) or (2), the "SERIES A
LIQUIDATION PREFERENCE"). In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
-4-
<PAGE>
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately
prior to such event under clause (2) 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 that were 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) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Participating Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series
A Participating Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. NO REDEMPTION. The shares of Series A Participating
Preferred Stock shall not be redeemable.
Section 9. RANKING. The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding
shares of Series A Participating Preferred Stock, voting separately as a
class.
Section 11. FRACTIONAL SHARES. Series A Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional
-5-
<PAGE>
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Participating Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this Corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of
Determination of Rights, Preferences and Privileges in accordance with the
foregoing resolution and the provisions of Delaware law and to take such
actions as they may deem necessary or appropriate to carry out the intent of
the foregoing resolution."
That the authorized number of shares of Preferred Stock of the Corporation
is 1,000,000, and that no such Preferred Stock has been issued.
We further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Determination are true and correct of our own
knowledge.
Executed at Menlo Park, California on September 19, 1997.
----------------------------------------
William G. Mavity, President and Chief
Executive Officer
----------------------------------------
Craig W. Johnson, Secretary
-6-
<PAGE>
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
<PAGE>
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER SEPTEMBER 19, 2007 OR EARLIER IF TERMINATED BY THE
COMPANY OR IF THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.(1)
Rights Certificate
This certifies that _____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of September 19, 1997 (the "RIGHTS
AGREEMENT"), between InnerDyne, Inc., a Delaware corporation (the "COMPANY"),
and American Stock Transfer and Trust Company (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 September 19, 2007 at the office of the Rights Agent designated for
such purpose, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A Participating
Preferred Stock, par value $0.01 per share, (the "PREFERRED SHARES"), of the
Company, at a purchase price of $20.00 per one-thousandth (1/1000) of a
Preferred Share (the "PURCHASE PRICE"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one-thousandths of a Preferred Share which may
be purchased upon exercise hereof) set forth above are the number and
Purchase Price as of September 19, 1997, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number and kind of Preferred Shares or other securities which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
- ----------------------
(1) The portion of the legend in bracket shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE>
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of
the Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option,
at a redemption price of $0.01 per Right or (ii) may be exchanged by the
Company in whole or in part for Common Shares, substantially equivalent
rights or other consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may
be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
No fractional portion less than integral multiples of one one-thousandth
of a Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided
in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
-2-
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________________.
ATTEST: InnerDyne, Inc.
By:
- ------------------------------ ----------------------------------
Secretary President
Countersigned:
American Stock Transfer and Trust Company
- ------------------------------
as Rights Agent
By:
---------------------------
Authorized Signature
-3-
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED _______________________________________ hereby sells,
assigns and transfers unto ______________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _________________
___________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or any other member of a medallion
signature guarantee program approved by the Securities Transfer Association.
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate is not being sold, assigned and transferred
by or on behalf of a Person who is or was an Acquiring Person, or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of any such Person.
Dated:__________________
___________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or any other member of a medallion
signature guarantee program approved by the Securities Transfer Association.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate)
To:____________________
The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Rights Certificate to
purchase the number of one-thousandths of a Preferred Share issuable upon the
exercise of such Rights and requests that certificates for such number of
one-thousandths of a Preferred Share 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 Rights
Certificate, a new Rights 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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or any other member of a medallion
signature guarantee program approved by the Securities Transfer Association. <PAGE>
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of any such Person.
Dated:_________________
___________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or any other member of a medallion
signature guarantee program approved by the Securities Transfer Association.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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EXHIBIT C
SUMMARY OF RIGHTS
<PAGE>
INNERDYNE
STOCKHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
Distribution and The Board of Directors has declared a dividend of
Transfer of Rights; one Right for each share of InnerDyne Common Stock
Rights Certificate: outstanding. Prior to the Distribution Date referred
to below, the Rights will be evidenced by and trade
with the certificates for the Common Stock. After
the Distribution Date, InnerDyne (the "COMPANY")
will mail Rights certificates to the Company's
stockholders and the Rights will become transferable
apart from the Common Stock.
DISTRIBUTION DATE: Rights will separate from the Common Stock and
become exercisable following the tenth day (or such
later date as may be determined by a majority of the
Directors not affiliated with the acquiring person
or group (the "CONTINUING DIRECTORS")) after a
person or group (a) acquires beneficial ownership of
15% or more of the Company's Common Stock or (b)
announces a tender or exchange offer, the
consummation of which would result in ownership by a
person or group of 15% or more of the Company's
Common Stock.
Preferred Stock After the Distribution Date, each Right will entitle
Purchasable Upon the holder to purchase, for $20.00, a fraction of a
EXERCISE OF RIGHTS: share of the Company's Preferred Stock with economic
terms similar to that of one share of the Company's
Common Stock.
FLIP-IN: If an acquiror (an "ACQUIRING PERSON") obtains 15%
or more of the Company's Common Stock (other than
pursuant to a tender offer deemed fair by the Board
of Directors (a "PERMITTED OFFER")), THEN each Right
(other than Rights owned by an Acquiring Person or
its affiliates) will entitle the holder thereof to
purchase, for the exercise price, a number of shares
of the Company's Common Stock having a then current
market value of twice the exercise price.
<PAGE>
FLIP-OVER: If, after the Shares Acquisition Date (defined
below), (a) the Company merges into another entity,
(b) an acquiring entity merges into the Company or
(c) the Company sells more than 50% of the Company's
assets or earning power, THEN each Right (other than
Rights owned by an Acquiring Person or its
affiliates) will entitle the holder thereof to
purchase, for the exercise price, a number of shares
of Common Stock of the person engaging in the
transaction having a then current market value of
twice the exercise price (unless the transaction
satisfies certain conditions and is consummated with
a person who acquired shares pursuant to a Permitted
Offer, in which case the Rights will expire).
EXCHANGE PROVISION: At any time after an event triggering the flip-in or
flip-over rights and prior to the acquisition by the
Acquiring Person of 50% or more of the outstanding
Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by
the Acquiring Person or its affiliates), in whole or
in part, at an exchange ratio of one Common Share
per Right (subject to adjustment).
Redemption of Rights will be redeemable at the Company's option
THE RIGHTS: for $0.01 per Right at any time on or prior to the
tenth day (or such later date as may be determined
by a majority of the Continuing Directors) after
public announcement that a person has acquired
beneficial ownership of 15% or more of the Company's
Common Stock (the "SHARES ACQUISITION DATE").
Expiration of The Rights expire on the earliest of (a) September
THE RIGHTS: 19, 2007, (b) exchange or redemption of the Rights
as described above or (c) consummation of a merger
or consolidation or sale of assets resulting in
expiration of the Rights as described above.
Amendment of Terms The terms of the Rights and the Rights Agreement may
OF RIGHTS: be amended in any respect without the consent of the
Rights holders on or prior to the Distribution Date;
thereafter, the terms of the Rights and the Rights
Agreement may be amended without the consent of the
Rights holders in order to cure any ambiguities or
to make changes which do not adversely affect the
interests of Rights holders (other than the
Acquiring Person).
VOTING RIGHTS: Rights will not have any voting rights.
Anti-Dilution Rights will have the benefit of certain customary
PROVISIONS: anti-dilution provisions.
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<PAGE>
TAXES: The Rights distribution should not be taxable for
federal income tax purposes. However, following an
event which renders the Rights exercisable or upon
redemption of the Rights, stockholders may recognize
taxable income.
The foregoing is a summary of certain principal terms of the Stockholder
Rights Plan only and is qualified in its entirety by reference to the
detailed terms of the Rights Agreement dated as of September 19, 1997 between
the Company and the Rights Agent.
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