FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
CURRENT REPORT
Pursuant to Section 13 of 15(d)
of the Securities and Exchange Act of 1934
-----------------------
Date of Report: February 21, 1997
ORTHOLOGIC CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-21214 86-0585310
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(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) Identification No.)
2850 South 36th Street, Suite 16, Phoenix, Arizona 85034
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(Address of principal excecutive office)
Registrant's telephone number, including area code:
(602) 437-5520
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<PAGE>
Item 5. Other Events.
On February 21, 1997, the Board of Directors of OrthoLogic
Corp. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, par value $.0005 per share (a "Common
Share"), of the Company to stockholders of record at the close of business on
March 12, 1997 (the "Record Date"). Except as set forth below, each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Preferred Stock, par value $.0005 per share ("Series A
Shares"), at a price of $25.00 (the "Purchase Price"), subject to adjustment.
The Purchase Price shall be paid in cash. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Bank of New York, as Rights Agent.
Initially, no separate Right Certificates will be distributed. Until
the earlier to occur of (a) 10 business days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the outstanding Common Shares or (b) 15 business days following
the commencement of a tender offer or exchange offer if, upon consummation
hereof, such person or group would be the beneficial owner of 20% or more of
such outstanding Common Shares (the earlier of such dates being called the
"Separation Date"), the Rights will be evidenced, with respect to any Common
Shares outstanding as of the Record Date, by the certificates representing such
Common Shares. The Rights Agreement provides that, until the Separation Date,
the Rights will be transferred with, and only with, Common Share certificates.
From as soon as practicable after the Record Date and until the Separation Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Separation Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificates. As
soon as practicable following the Separation Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Separation Date and,
thereafter, such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Separation Date and
will expire on March 11, 2007, unless earlier redeemed by the Company as
described below.
<PAGE>
In the event that, at any time following the Separation Date, (a) the
Company is the surviving corporation in a merger with an Acquiring Person and
the Company's Common Shares are not changed or exchanged, (b) a person (other
than the Company and its affiliates) becomes the beneficial owner of 20% or more
of the then outstanding Common Shares, (c) an Acquiring Person engages in one or
more "self-dealing" transactions as set forth in the Rights Agreement or (d)
during such time as there is an Acquiring Person, an event occurs that results
in such Acquiring Person's ownership interest being increased by more than one
percent (e.g., a reverse stock split), the Rights Agreement provides that proper
provision shall be made so that each holder of a Right will thereafter be
entitled to receive, upon exercise, Common Shares (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right.
In the event that, at any time following the first date of
public announcement by the Company or an Acquiring Person indicating that an
Acquiring Person has become such (the "Shares Acquisition Date"), (a) the
Company engages in a merger or other business combination transaction in which
the Company is not the surviving corporation, (b) the Company engages in a
merger or other business combination transaction with another person in which
the Company is the surviving corporation, but in which its Common Shares are
changed or exchanged or (c) 50% or more of the Company's assets or earning power
is sold or transferred, the Rights Agreement provides that proper provision
shall be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, common shares of the acquiring company having a value equal to two times
the exercise price of the Right.
The Board may, at its option, at any time after the right of
the Board to redeem the Rights has expired or terminated (with certain
exceptions), exchange all or part of the then outstanding and exercisable Rights
(other than those held by the Acquiring Person and Affiliates and Associates of
the Acquiring Person) for Common Shares at a ratio of one Common Share per
Right, as adjusted; provided, however, that such Right cannot be exercised once
a Person, together with such Person's Affiliates and Associates, becomes the
owner of 50% or more of the Outstanding Common Shares. If the Board authorizes
such an exchange, the Rights will immediately cease to be exercisable.
Notwithstanding any of the foregoing, following the occurrence
of any of the events set forth in the fourth and fifth paragraphs of this
Summary, any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person shall
immediately become null and void.
2
<PAGE>
The Purchase Price payable, and the number of Series A Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (a) in the event of
a dividend of Series A Shares on, or a subdivision, combination or
reclassification of, the Series A Shares, (b) upon the grant to holders of the
Series A Shares of certain rights or warrants to subscribe for Series A Shares
or securities convertible into Series A Shares at less than the current market
price of the Series A Shares or (c) upon the distribution to holders of the
Series A Shares of debt securities or assets (excluding regular quarterly cash
dividends and dividends payable in Series A Shares) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares that are not integral multiples
of one one-hundredth of a Series A Share will be issued and, in lieu thereof, an
adjustment in cash will be made based on the closing price of the Series A
Shares on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until 10
Business Days following the Shares Acquisition Date, the Board of Directors of
the Company (the "Board"), with the concurrence of a majority of the
IndepenTen-t Directors (those members of the Board who are not officers or
employees of the Company or of any Subsidiary of the Company and who are not
Acquiring Persons or their Affiliates, Associates, nominees or representatives,
and who either (a) were members of the Board prior to the time any person became
an Acquiring Person or (b) were subsequently elected to the Board and were
recommended for election or approved by a majority of the Independent Directors
then on the Board), may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right, subject to adjustment (the "Redemption Price"). Thereafter,
the Board may only redeem the Rights in certain specified circumstances
including in connection with certain events not involving an Acquiring Person or
an Affiliate or Associate of an Acquiring Person. In addition, the Company's
right of redemption may be reinstated if (a) an Acquiring Person reduces its
beneficial ownership to 10% or less of the outstanding Common Shares in a
transaction or series of transactions not involving the Company and (b) there is
at such time no other Acquiring Person. The Rights Agreement may also be
amended, as described below, to extend the period of redemption. Immediately
upon the action of the Board ordering redemption of the Rights, the Rights will
no longer be exercisable, except upon the occurrence of certain events that have
the effect of deferring the effective time of the redemption. In general,
thereafter the only right of the holders of Rights will be to receive the
Redemption Price.
3
<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other consideration) of the
Company or for common shares of the Acquiring Person as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board with the concurrence of a majority of the Independent
Directors or by special approval of the stockholders of the Company prior to the
Separation Date. Thereafter, the period during which the Rights may be redeemed
may be extended (by action of the Board, with the concurrence of a majority of
the Independent Directors or by special approval of the stockholders of the
Company), and other provisions of the Rights Agreement may be amended by action
of the Board with the concurrence of a majority of the Independent Directors or
by special approval of the shareholders of the Company; provided, however, that
(a) such amendment will not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) and (b) no amendment shall be
made at such time as the Rights are no longer redeemable (except for the
possibility of the right of redemption being reinstated as described above).
A copy of the Rights Agreement is filed with the Securities
and Exchange Commission as an Exhibit to this Right on Form 8-K. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
The Series A Shares may not be redeemed by the Company. Each
Series A Share will have a minimum cumulative preferential quarterly dividend
rate of $10.00 per share, or, subject to adjustment, 100 times the aggregate
dividend declared per Common Share. In the event of liquidation, the holders of
the Series A Shares will receive a preferred liquidation payment of $100-00 per
share provided that the holders of Series A Shares shall be entitled to receive
an aggregate amount per share, subject to adjustment, equal to 100 times the
aggregate amount to be distributed per Common Share.
The Series A Shares will generally have no voting rights
except as provided in the Company's Certificate of Incorporation, as amended, or
as otherwise required by law.
4
<PAGE>
As of February 21, 1997, there were 25,031,846 Common Shares
outstanding, and 2,534,644 Common Shares reserved for issuance pursuant to
outstanding options and warrants. Each outstanding Common Share on March 12,
1997 will receive one Right as long as the Rights are attached to the Common
Shares, the Company will issue one Right with each new Common Share, so that all
such shares will have attached Rights. Three hundred thousand (300,000) Series A
Shares have been reserved for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
dilution to a person or group that attempts to acquire the Company (without
conditioning the offer on any substantial number of Rights being simultaneously
acquired) in a transaction which the Board of Directors does not approve as in
the best interest of the Company and its shareholders.
The form of Rights Agreement between the Company and Bank of New York
specifying the terms of the Rights, along with Exhibit A thereto (the
Certificate of Designation in respective Series A Preferred Stock), Exhibit B
thereto (a form of Rights Certificate) and Exhibit C thereto (the Summary of
Rights) are attached hereto as Exhibit 4.1 and are incorporated herein by
reference. The foregoing description of the Rights is qualified by reference to
the Rights Agreement.
5
<PAGE>
Item 7 Financial Statements, ProForma Financial Information
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and Exhibits.
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(c) Exhibits:
4.1 Rights Agreement dated as of March 4, 1997, between Company and
Bank of New York and Exhibits A, B and C thereto.
6
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ORTHOLOGIC CORP.
Registrant
By: /s/ Allan M. Weinstein
------------------------------
Name: Allan M. Weinstein
Title: Chairman and
Chief Executive
Officer
Date: March 5, 1997.
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<PAGE>
ORTHOLOGIC CORP.
Exhibit Index
4.1 Rights Agreement, dated as of March 4, 1997, between registrant and
Bank of New York and Exhibits A, B and C thereto.
================================================================================
RIGHTS AGREEMENT
between
ORTHOLOGIC CORP.
and
BANK OF NEW YORK
Dated: As of March 4, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
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Page
----
Section 1. Certain Definitions........................................... 1
Section 2. Appointment of Rights Agent................................... 5
Section 3. Issue of Right Certificates................................... 6
Section 4. Form of Right Certificates.................................... 7
Section 5. Countersignature and Registration............................. 8
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates............................. 9
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights..................................... 10
Section 8. Cancellation and Destruction of Right
Certificates.................................................. 12
Section 9. Reservation and Availability of Series A
Shares; Registration.......................................... 13
Section 10. Series A Shares Record Date................................... 14
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights................................. 15
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares........................................... 25
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.................................... 25
Section 14. Fractional Rights and Fractional Shares....................... 27
Section 15. Rights of Action.............................................. 29
Section 16. Agreement of Right Holders.................................... 29
Section 17. Right Certificate Holder Not Deemed
a Shareholder................................................. 30
Section 18. Concerning the Rights Agent................................... 31
Section 19. Merger or Consolidation or Change of Name
of Rights Agent............................................... 31
B-i
<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
Page
----
Section 20. Duties of Rights Agent........................................ 32
Section 21. Change of Rights Agent........................................ 34
Section 22. Issuance of New Right Certificates............................ 35
Section 23. Redemption.................................................... 35
Section 24. Exchange...................................................... 37
Section 25. Notice of Certain Events...................................... 38
Section 26. Notices....................................................... 39
Section 27. Supplements and Amendments.................................... 40
Section 28. Successors.................................................... 41
Section 29. Determinations and Actions by the
Board of Directors............................................ 41
Section 30. Benefits of this Agreement.................................... 42
Section 31. Severability.................................................. 42
Section 32. Governing Law................................................. 42
Section 33. Consequential Damages......................................... 43
Section 34. Counterparts.................................................. 43
Section 35. Descriptive Headings.......................................... 43
B-ii
<PAGE>
RIGHTS AGREEMENT
----------------
Rights Agreement, dated as of March 4, 1997, between
ORTHOLOGIC CORP., a Delaware corporation (the "Company"), and BANK OF NEW YORK,
a New York corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding at the close of
business on March 12, 1997 (the "Record Date"), each Right representing the
right to purchase one one-hundredth (1/100) of a share of Series A Preferred
Stock, par value $.0005 per share, of the Company ("Series A Preferred Stock")
having the rights and preferences set forth in the form of Preferred Stock
Designation with respect to the Series A Preferred Stock, a copy of which is
attached hereto as Exhibit A. The Board of Directors has further authorized the
issuance of one Right with respect to each Common Share that shall become
outstanding (whether originally issued or delivered from the Company's treasury)
after the Record Date and on or prior to the earliest of the Separation Date,
the Redemption Date and the Final Expiration Date (each as hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who,
together with all Affiliates and Associates of such Person, shall hereafter
become the Beneficial Owner of fifteen percent (15%) or more of the Common
Shares then outstanding, but shall not include the Company, any wholly owned
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.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations (the "Rules") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the Record Date.
(c) A Person shall be deemed the "Beneficial Owner"
of and shall be deemed to "beneficially own" any
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2
securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) 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 to be the Beneficial Owner of, or to beneficially
own, 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; and provided further, that a Person shall not be deemed to be
the Beneficial Owner of, or to beneficially own, securities that such
Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) upon the exercise of
conversion rights conferred in any class or series of Preferred Stock,
par value $.0005 per share, of the Company issued prior to the
Separation Date if the resolutions of the Board providing for the
issuance of such class or series of Preferred Stock shall specifically
refer to this Rights Agreement and provide that the right to acquire
securities upon the exercise of conversion rights so conferred shall
not be deemed to constitute beneficial ownership of such securities.
(ii) that such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of, or of which any of them, directly or
indirectly, has "beneficial ownership" (as determined pursuant to Rule
13d-3 of the Rules, as in effect on the Record Date) (including
pursuant to any agreement, arrangement or understanding, whether or not
in writing); provided, however, that a Person shall not be deemed to be
the Beneficial Owner of, or to beneficially own, any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding arises solely from (A) a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the Rules, or (B)
is made in connection with, or is otherwise to participate in, a proxy
or consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable provisions of the Rules, in either case
described in clause (A) or (B) above, whether or not such agreement,
arrangement
<PAGE>
3
or understanding is also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of, or with respect to, acquiring,
holding, voting (except as described in clauses (A) and (B) of the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company;
provided, however, that nothing in this paragraph (c) shall cause a person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own" any securities acquired through such person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(d) "Board" means the Board of Directors of the
Company.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in Phoenix, Arizona or
New York, New York are authorized or obligated by law or executive order to
close.
(f) "Close of business" on any given date shall mean
5:00 P.M., Phoenix, Arizona time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Phoenix, Arizona time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Company shall mean shares of Common Stock, par value $.0005 per share, of the
Company. "Common Shares" or "common shares," when used with reference to any
Person other than the Company, shall mean the capital stock of such Person with
the greatest voting power or the equity securities or other equity interest
having power to control or direct the management of such Person.
(h) "Independent Director" shall mean (i) any member
of the Board who is not an officer or employee of the Company or of any
Subsidiary of the Company and who is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a nominee or representative of an Acquiring
Person or of any such Affiliate or Associate and who was a member of the Board
prior to the time any Person became an Acquiring Person and
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4
(ii) any successor to a member of the Board who was a member of the Board prior
to the time any Person became an Acquiring Person, but only if such successor
(x) is not an officer or employee of the Company or any Subsidiary of the
Company and is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a nominee or representative of an Acquiring Person or any
such Affiliate or Associate and (y) was recommended for election or elected to
succeed such member of the Board by a majority of the Independent Directors then
on the Board.
(i) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company or other entity and shall
include any successor (by merger or otherwise) of such entity.
(j) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii)(A), (B) or (C).
(k) "Section 13(a) Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a).
(l) "Series A Shares" shall mean shares of Series A
Preferred Stock, par value $.0005 a share, of the Company, including any
authorized fraction of a Series A Share, unless the context otherwise requires.
(m) "Shares Acquisition Date" shall mean the first
date of public announcement (including, without limitation, a report filed
pursuant to Section 13(d) or 14(d) under the Exchange Act) by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.
(n) "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which a majority of the voting power
of the voting securities or voting interests is owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.
(o) "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13(a) Event.
The following terms shall have the meanings indicated in the
following Sections of this Agreement:
(i) "Act" -- Section 9(c).
(ii) "Adjustment Shares" -- Section
11(a)(ii).
(iii) "Common Share equivalent" -- Section
11(a)(iii)
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5
(iv) "Current Value" -- Section 11(a)(iii).
(v) "equivalent preferred shares" -- Section
11(b).
(vi) "Exchange Act" -- Section 1(b).
(vii) "Extension Date" -- Section 27.
(viii) "Final Expiration Date" --Section 7(a).
(ix) "Principal Party" -- Section 13(b).
(x) "Purchase Price" -- Sections 4(a),
11(a)(ii) and 13(a).
(xi) "Record Date" -- Preamble.
(xii) "Redemption Date" -- Section 7(a).
(xiii) "Redemption Price" -- Section 23(a)(i).
(xiv) "Rules" -- Section 1(b).
(xv) "Separation Date" -- Section 3(a).
(xvi) "Series A Preferred Stock" -- Preamble.
(xvii) "Spread" -- Section 11(a)(iii).
(xviii) "Springing Right of Redemption" --
Section 23(a)(i).
(xix) "Substitution Period" -- Section
11(a)(iii).
(xx) "Summary of Rights -- Section 3(b).
(xxi) "Trading Day" -- Section 11(d)(i).
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the Separation
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 and
agrees to act as Rights Agent under this Agreement. The Company may from time to
time appoint such co-
<PAGE>
6
rights agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on
the tenth Business Day following the Shares Acquisition Date or (ii) the close
of business on the fifteenth Business Day after the date on which 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 commenced within
the meaning of Rule 14d-2(a) of the Rules, if upon consummation thereof, such
Person would be the Beneficial Owner of twenty percent (20%) or more of the
Common Shares then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Separation Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Separation Date, the Rights Agent will send, by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Separation Date, at the address of
such holder shown on the records of the Company, one or more Right Certificates,
in substantially the form of Exhibit B hereto, evidencing one Right for each
Common Share so held. In the event that an adjustment in the number of Rights
per Common Share has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Right Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Separation Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As soon as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Series A
Preferred Stock, in substantially the form attached hereto as Exhibit C (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. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Separation Date, the Rights will be evidenced by such certificates registered in
the names of the
<PAGE>
7
holders thereof and the registered holders of the Common Shares shall also be
the registered holders of the associated Rights. Until the earliest of the
Separation Date, the Redemption Date or the Final Expiration Date, the surrender
for transfer of any certificate for Common Shares outstanding on the Record Date
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Certificates for Common Shares issued after the
Record Date but prior to the earliest of the Separation Date, the Redemption
Date or the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN ORTHOLOGIC
CORP. AND BANK OF NEW YORK DATED AS OF MARCH 4, 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 ORTHOLOGIC CORP. 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.
ORTHOLOGIC CORP. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT WITHOUT CHARGE PROMPTLY FOLLOWING 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.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election
to purchase Series A Shares, exercise notice and of assignment to be printed on
the reverse thereof) shall be substantially the same as 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 Right Certificates, whenever
distributed, shall be
<PAGE>
8
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of one one-hundredths of a share of Series A Preferred
Stock as shall be set forth therein at the price per one one-hundredth of a
Series A Share set forth therein (the "Purchase Price"), but the amount and type
of the securities purchasable (or other consideration to be made available) upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents 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 such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (other than a bona fide
purchaser for value who has no knowledge that the transferor was an Acquiring
Person or an Associate or Affiliate of an Acquiring Person) or (iii) a
transferee of an Acquiring Person (or 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 that the Board 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 Right Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHT 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 RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board or its President, Chief
Executive Officer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal, attested by the
Secretary, the Treasurer or any Assistant Secretary or Assistant Treasurer of
<PAGE>
9
the Company, or shall bear a facsimile thereof. The Right Certificates shall not
be valid for any purpose unless countersigned by the Rights Agent. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Separation Date, the Rights Agent
will keep or cause to be kept, at its office or agency designated for such
purpose, books for registration and transfer of the Right Certificates issued or
to be issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates, the certificate number of each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e)
and 14 hereof, at any time after the close of business on the Separation Date,
and at or prior to the close of business on the earlier of the Redemption Date
or the Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
Series A Shares (or, following a Section 11(a)(ii) Event or Section 13(a) Event,
Common Shares, other securities or property, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
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 Right Certificate
<PAGE>
10
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
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 countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to Section 7(e) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Separation Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth of a
Series A Share as to which the Rights are exercised, at or prior to the close of
business on the earlier of (i) March 11, 2007 (the "Final Expiration Date") or
(ii) the date on which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date").
(b) The Purchase Price for each one one-hundredth of
a Series A Share pursuant to the exercise of a Right shall initially be
Twenty-Five Dollars ($25.00), 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.
<PAGE>
11
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Series A Shares (or other
shares, 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 Right 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)
either (A) requisition from any transfer agent of the Series A Shares (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Series A Shares (or fractions thereof) 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 Series A Shares issuable upon exercise of the Rights hereunder with
a depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Series A Share as are to be
purchased (in which case certificates for the Series A Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities (including Common Shares) or assets pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such other securities
or assets are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person
<PAGE>
12
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee from an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (other than a bona fide
purchaser for value who has no knowledge that the transferor was an Acquiring
Person or an Associate or Affiliate of an Acquiring Person) or (iii) a
transferee of an Acquiring Person (or 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 that the Board has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and any holder of such Rights shall thereupon have no rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to 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 Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(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 Right Certificate
surrendered for 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.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
<PAGE>
13
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Series A Shares;
Registration.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
Series A Shares the number of Series A Shares that will be sufficient to permit
the exercise in full of all outstanding Rights. Prior to the occurrence of a
Triggering Event, the Company shall not be obliged to cause to be reserved and
kept available out of its authorized and unissued Common Shares or shares of
preferred stock (other than Series A Shares), any such Common Shares or any
shares of preferred stock (other than the Series A Shares) to permit exercise of
outstanding Rights.
(b) If the Series A Shares issuable upon the exercise
of Rights are listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) If then required by applicable law, the Company
shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the occurrence of a Triggering Event as to which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined pursuant to this Agreement, or as soon as is required by law
following the Separation Date, as the case may be, a registration statement
under the Securities Act of 1933 (the "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 Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities and (B) the Final Expiration Date. If then required by applicable
law, the Company will also take such action as may be appropriate under the
securities or "blue sky" laws of the various states. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement. Upon any such suspension,
the Company shall issue a public announcement stating
<PAGE>
14
that the exercisability of the Rights has been temporarily suspended.
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.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Series A Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(e) The Company covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Right
Certificates or of any Series A Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in respect
of any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Series A Shares (or Common Shares
and/or other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for Series A Shares (or Common
Shares and/or other securities, as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Series A Shares Record Date. Each person in whose
name any certificate for Series A Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Series A
Shares (or Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Series A Shares (or Common Shares and/or other securities, as the case may be)
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 Series A Shares (or Common Shares
and/or other securities, as the case may be) transfer
<PAGE>
15
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled (in such
holder's capacity as such) to any rights of a shareholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote any shares, to receive dividends or other
distributions with respect to any shares or to exercise any preemptive rights
with respect to any shares, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
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 that the Company shall at any
time after the date of this Agreement (A) declare a dividend on the Series A
Shares payable in Series A Shares, (B) subdivide the outstanding Series A
Shares, (C) combine the outstanding Series A Shares into a smaller number of
Series A Shares or (D) issue any shares of its capital stock in a
reclassification of the Series A Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock that, if such Right had been exercised
immediately prior to such date and at a time when the Series A Shares transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
(ii) In the event that:
(A) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, (1) shall merge into
the Company or otherwise combine with the Company and the Company shall
be the continuing or surviving corporation of such merger or
combination and the Common Shares of the Company shall remain
outstanding and unchanged, (2) shall, in one or more transactions,
transfer
<PAGE>
16
any assets to the Company or to any of its Subsidiaries (including, in
the case of Subsidiaries, by way of a merger or consolidation of any
such Subsidiary) in exchange (in whole or in part) for shares of any
class of capital stock of the Company or any of its Subsidiaries or for
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries or otherwise
obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of
the Company or any of its Subsidiaries or securities exercisable for or
convertible into shares of any class of capital stock of the Company or
any of its Subsidiaries (other than as part of a pro rata distribution
to all holders of such shares of any class of capital stock of the
Company), (3) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of assets (in one or more transactions),
to, from, with or of, as the case may be, the Company or any of its
Subsidiaries (including, in the case of Subsidiaries, by way of a
merger or consolidation of any Subsidiary), on terms and conditions
less favorable to the Company than the Company would be able to obtain
in arm's-length negotiation with an unaffiliated third party, other
than pursuant to a transaction set forth in Section 13(a) hereof, (4)
shall receive any compensation from the Company or any of its
Subsidiaries other than compensation for full time employment as a
regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices or (5) shall receive the benefit,
directly or indirectly (except proportionately as a shareholder and
except if resulting from a requirement of law or governmental
regulation), of any loans, assumptions of loans, advances, guarantees,
pledges or other financial assistance, or any tax credits or other tax
advantage, provided by the Company or any of its Subsidiaries;
(B) 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 entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan), alone or together with its Affiliates and
Associates, shall become the Beneficial Owner of twenty percent (20%)
or more of the Common Shares then outstanding, other than pursuant to
any transaction set forth in Section 13(a) hereof; or
(C) during such time as there is an
Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of the
Company, or any merger or
<PAGE>
17
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a transaction to which Section 13(a)
applies (whether or not with or into or otherwise involving an
Acquiring Person), that has the effect, directly or indirectly, of
increasing by more than one percent (1%) the proportionate share of the
outstanding shares of any class of equity securities or of securities
exercisable for or convertible into equity securities of the Company or
any of its Subsidiaries, that is directly or indirectly owned by any
Acquiring Person or any Associate or Affiliate of any Acquiring Person;
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below and in Section 7(e) hereof, shall
thereafter have a right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of Series
A Shares, and subject to the provisions of Section 11(a)(iii) below, such number
of Common Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a Series A
Share for which a Right was exercisable immediately prior to the first
occurrence of an event set forth in Section 11(a)(ii)(A), (B) or (C) above, and
(y) dividing that product (which, following such first occurrence, shall be
referred to as the "Purchase Price" for all purposes of this Agreement) by fifty
percent (50%) of the current per share market price of the Common Shares
(determined pursuant to Section 11(d) hereof), but not less than the par value
thereof, on the date of such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) In the event that the total of the
Common Shares that are issued but not outstanding and authorized but unissued
(excluding Common Shares reserved for issuance pursuant to the specific terms of
any indenture, option plan or other agreement) is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, and
subject to such limitations as are necessary to prevent a default under any
agreement for money borrowed to which the Company is a party and to comply with
applicable law, then the Board shall: (A) determine the excess of (1) the value,
based upon the current per share market price of the Common Shares (determined
pursuant to Section 11(d) hereof), of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread") and (B) with respect to each Right, make adequate
provision to substitute for, or provide an election to acquire in lieu of, the
Adjustment Shares, upon payment of the applicable Purchase Price (which term
shall include any reduced Purchase Price) any combination of the
<PAGE>
18
following having an aggregate value equal to the Current Value (such aggregate
value to be determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board): (1) a reduction in
the Purchase Price, (2) Common Shares and/or other equity securities of the
Company (including, without limitation, shares or units of shares of any series
of preferred stock that the Board, upon approval by a majority of the
Independent Directors, has deemed to have the same value as Common Shares (such
shares or units of share of preferred stock hereinafter referred to as "Common
Share equivalents")) and/or (3) debt securities of the Company and/or cash and
other assets; provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the first occurrence of a Triggering Event, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the extent
available) and then, if necessary, cash, which securities and/or cash in the
aggregate are equal to the Spread. If the Board 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, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days following the first occurrence of a Triggering Event, in order that
the Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action needs to be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii),
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 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)(iii),
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 date of
the first occurrence of a Triggering Event.
The provisions of this Section 11(a)(iii) shall apply only to
Common Shares of the Company and shall not apply to the securities of any other
Person.
<PAGE>
19
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of Series A Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Series A Shares (or shares having the same
rights, privileges and preferences as the Series A Shares ("equivalent preferred
shares")) or securities convertible into Series A Shares or equivalent preferred
shares at a price per Series A Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Series A Shares or
equivalent preferred shares) less than the current per share market price of the
Series A Shares (as defined in Section 11(d) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Series A Shares
outstanding on such record date plus the number of Series A Shares that the
aggregate offering price of the total number of Series A Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Series A Shares outstanding on such record date plus the number of additional
Series A Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
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,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the holders of the Rights. Series A Shares owned
by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price that would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for
the distribution to all holders of the Series A Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of any debt securities, cash or assets
(other than a regular quarterly cash dividend or a dividend payable in Series A
Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record
<PAGE>
20
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 per share market price of the Series A Shares (as defined in Section
11(d) hereof) on such record date, less the fair market value (as determined in
good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and binding on the holders of Rights) of the portion
of the assets or debt securities so to be distributed or of such subscription
rights or warrants applicable to one Series A Share and the denominator of which
shall be such current per share market price of the Series A Shares (as
determined pursuant to Section 11(d) hereof). Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price that would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of the Common Shares on any date shall be
deemed to be the lesser of (x) the average of the daily closing prices per
Common Share for the 30 consecutive Trading Days immediately prior to such date
or (y) the average of the daily closing prices per Common Share for the 30
consecutive Trading Days immediately following such date; provided, however,
that in the event that the current per share market price of the Common Shares
is determined during a period following the announcement by the issuer of such
Common Shares of a dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such Common Shares (other than
the Rights), or any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of 20 Trading Days after the ex-dividend
date for such dividend or distribution, then, and in each such case, the current
market price shall be appropriately adjusted to reflect the current market price
per Common Share equivalent. 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 on the principal national securities exchange, if any, on
which the Common Shares are then listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by The
NASDAQ Stock Market ("NASDAQ") or such other system then in use, or, if on any
such date the Common Shares are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board. The term "Trading
Day" shall mean a day
<PAGE>
21
on which the principal national securities exchange or NASDAQ on which the
Common Shares are listed or traded or are admitted to trading is open for the
transaction of business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange or NASDAQ, a Business Day.
(ii) For the purpose of any computation
hereunder, the "current per share market price" of the Series A Shares shall be
determined in the same manner as set forth above for Common Shares in clause (i)
of this Section 11(d). If the current per share market price of the Series A
Shares cannot be determined in the manner provided above, the "current per share
market price" of the Series A Shares shall be conclusively deemed to be the
current per share market price of the Common Shares (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by one hundred. If neither the Common Shares nor
the Series A Shares are 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, whose determination shall be described in a statement filed with the
Rights Agent and binding on the holders of Rights.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that any
adjustments that 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 the
nearest one-hundredth of a Common Share or other share or one ten-thousandth of
a Series A Share, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment provided for in this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any property, other securities (other
than shares of capital stock of the Company) or shares of capital stock of the
Company other than Series A Shares, thereafter the amount of such property,
other securities (other than shares of capital stock of the Company) and the
number of such other shares of capital stock so receivable upon exercise of any
Right (as well as any consideration to be paid therefor) 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 Series A Shares (and the
Purchase Price) contained in this Section 11, and the provisions of Sections 7,
9, 10 and 13 with respect to the Series A
<PAGE>
22
Shares shall apply on like terms to any such property, other securities and
other shares of capital stock.
(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 Series A
Shares purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Series A Share (calculated to the nearest one
ten-thousandth of a Series A Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of Series A 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 one-hundredths of a
Series A 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 the number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
<PAGE>
23
Right Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Series A Shares issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a share and the
number of shares that were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then
stated value, if any, of the Series A Shares issuable upon exercise of the
Rights, the Company shall take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Series A Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 requires
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 Series A Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Series A Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those
<PAGE>
24
adjustments expressly required by this Section 11, as and to the extent that in
its good faith judgment the Board shall determine to be advisable in order that
any (i) consolidation or subdivision of the Series A Shares, (ii) issuance
wholly for cash of any of the Series A Shares at less than the current market
price, (iii) issuance wholly for cash of Series A Shares or securities that by
their terms are convertible into or exchangeable for Series A Shares, (iv)
dividends on Series A Shares payable in Series A Shares or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Series A Shares shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall
not, and shall not permit any Subsidiary, at any time after the Separation Date,
to (i) consolidate with, (ii) merge with or into or (iii) sell or transfer, in
one or more transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect that would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) The Company covenants and agrees that, after the
Separation Date, it will not, except as permitted by Section 23, Section 24,
Section 27 or Section 31 hereof, take (or permit any Subsidiary to take) any
action that at the time it is reasonably foreseeable will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights;
provided, however, that the issuance of additional Rights pursuant hereto,
including by action of the Board under Section 22 hereof, shall not be deemed to
violate this Section 11(o).
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record Date (i) declare a dividend on the outstanding Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the
outstanding Common Shares into a smaller number of shares, the number of Rights
associated with each Common Share then outstanding, or issued or delivered
thereafter, shall be proportionately adjusted so that the number of Rights
thereafter associated (whether before or after the Separation Date) with each
Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which shall be the total
number of Common Shares outstanding immediately prior
<PAGE>
25
to the occurrence of the event and the denominator of which shall be the total
number of Common Shares outstanding immediately following the occurrence of such
event. For purposes of this Section 11(p), any Common Shares issued after the
Separation Date that were not issued together with a Right (pursuant to the
Preamble hereto or by action of the Board pursuant to Section 22 hereof) shall
not be counted as outstanding.
Section 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 (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares or the Series A Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate (or, if prior to the
Separation Date, to each holder of a certificate representing Common Shares) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.
Section 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, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company) and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, (y) any Person (other than a Subsidiary of the
Company) shall consolidate with, or merge with or into, the Company and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in a single transaction or a series of related
transactions, assets or earning power aggregating more than fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company), then, and in each such case, proper provision shall be made so that
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradeable Common Shares of
<PAGE>
26
the Principal Party, not subject to any rights of first refusal, redemption or
repurchase, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a Series A Share
for which a Right is exercisable immediately prior to the first occurrence of a
Section 13(a) Event (or, if any event set forth in Sections 11(a)(ii)(A), (B)
and (C) has occurred prior to the Section 13(a) Event, multiplying the number of
such fractional shares for which a Right was exercisable immediately prior to
the first occurrence of an event set forth in Sections 11(a)(ii)(A), (B) and (C)
hereof by the Purchase Price immediately prior to such first occurrence), and
dividing that product (which, following the Section 13(a) Event, shall
thereafter be referred to as the "Purchase Price" for all purposes of this
Agreement) by (2) fifty percent (50%) of the current per share market price
(determined pursuant to Section 11(d) hereof) per Common Share (or other
securities or property as provided for herein) of such Principal Party on the
date of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13(a) Event; (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; and (v) the provisions of Sections 11(a)(ii) and 11(a)(iii) hereof
shall thereafter be of no effect following the first occurrence of a Section
13(a) Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the Person that
is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided, however,
that in any such case, (1) if
<PAGE>
37
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized Common Shares, which have not been issued or
reserved for issuance, to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will:
(i) prepare and file a registration
statement under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the Final
Expiration Date; and
(ii) deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for registration on
Form 10 under the Exchange Act. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other
transfers. In the event that one of the transactions described in Section 13(a)
hereof shall occur at any time after the occurrence of a transaction described
in Section 11(a)(ii) hereof, the Rights that have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
<PAGE>
28
fractions of Rights, except prior to the Separation Date as provided in Section
11(p) hereof, or to distribute Right Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange, if any, on which the Rights are then listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date the Rights are not publicly held or
so listed or traded, the current market value of a whole Right shall mean the
fair value of a whole Right as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
binding on the holders of Rights.
(b) The Company shall not be required to issue
fractions of Series A Shares (other than fractions that are integral multiples
of one one-hundredth of a Series A Share) upon exercise of the Rights or to
distribute certificates that evidence fractional Series A Shares (other than
fractions that are integral multiples of one one-hundredth of a Series A Share).
Fractions of Series A Shares in integral multiples of one one-hundredth of a
Series A Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Series A
Shares. In lieu of fractional Series A Shares that are not integral multiples of
one one-hundredth of a Series A Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the
<PAGE>
29
same fraction of the current market value of one Series A Share. For purposes of
this Section 14(b), the current market value of a Series A Share shall be the
closing price of a Series A Share (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of Common Shares upon
exercise of the Rights or to distribute certificates that evidence fractional
Common Shares. In lieu of fractional Common Shares, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For purposes of this Section 14(c), the
current market value of one Common Share shall be the closing price of one
Common Share (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(d) The holder of a Right, by the acceptance of the
Rights, expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as otherwise set forth
herein.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Separation Date, the registered holders of
any certificate representing Common Shares); and any registered holder of any
Right Certificate (or, prior to the Separation Date, of any other certificate
representing Common Shares), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Separation Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
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.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees
<PAGE>
30
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Separation Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Separation Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with appropriate
forms and certificates fully executed; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior to the
Separation 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 Right Certificates or the associated
Common Shares certificates 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.
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Series A Shares, or any
other securities of the Company, that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or
<PAGE>
31
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay 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 fully indemnified
against, shall be protected from, and shall incur no liability or expense
(including without limitation attorneys' fees and expenses) for, or in respect
of, any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Series A Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, instruction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust 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
<PAGE>
32
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization 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
<PAGE>
33
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 Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Series
A Shares to be issued pursuant to this Agreement or any Right Certificate or as
to whether any Series A 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, the Chief Executive
Officer, the President, any Vice President, the Secretary or the Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company
<PAGE>
34
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 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 Right 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 on such certificate attached to the form of assignment or form
of election to purchase, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Series A Shares by registered or
certified mail. In such event, the Company shall give written notice of such
resignation to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Series A Shares
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within
<PAGE>
35
a period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state of the United States, in good standing, that is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Series A Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, the Company may, if deemed necessary or appropriate by the Board,
issue Right Certificates in connection with the issuance or sale of Common
Shares following the Separation Date.
Section 23. Redemption.
(a) (i) The Board may, at its option, at any time
prior to the earlier of (A) the close of business on the tenth Business Day
following any Shares Acquisition Date or (B)
<PAGE>
36
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of One Cent ($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 hereinafter
referred to as the "Redemption Price"); provided, however, that if, following
the occurrence of a Shares Acquisition Date and following the expiration of the
right of redemption hereunder (other than a Springing Right of Redemption, as
defined below) but prior to any Triggering Event, each of the following shall
have occurred and remain in effect: (x) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of Common Shares in a
transaction, or series of transactions, that did not result in the occurrence of
a Triggering Event, such that such Person is thereafter a Beneficial Owner of
ten percent (10%) or less of the outstanding Common Shares; (y) there are no
other Persons, immediately following the occurrence of the event described in
clause (x) above, who are Acquiring Persons; and (z) the transfer or other
disposition described in clause (x) above was other than pursuant to a
transaction, or series of transactions, that directly or indirectly involved the
Company or any of its Subsidiaries, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23. The
reinstated right of redemption referred to in the preceding sentence and the
reinstated right of redemption referred to in Sections 27 and 31 hereof is
herein called the "Springing Right of Redemption." Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
pursuant to Section 11(a)(ii) at a time when the Rights are then redeemable
hereunder.
(ii) Following the occurrence of a Shares
Acquisition Date but prior to any event described in Section 13(a), the Board
may also redeem all but not less than all of the then outstanding Rights at the
Redemption Price in connection with any event of the type specified in Section
11(a)(ii)(A)(1) or 13(a) not involving an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (other than as a holder of common Shares being
treated like other such holders generally).
(b) In the case of a redemption permitted under
Section 23(a)(i), immediately upon the action of the Board 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. In the case of a redemption
permitted only under Section 23(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right
<PAGE>
37
to receive the Redemption Price only after ten business days following the
giving of notice of such redemption to the holders of such Rights if no event
set forth in Section 11(a)(ii) shall have occurred, and, if such event shall
have occurred, upon the later of ten business days following the giving of such
notice or the expiration of any period during which the Rights under Section
11(a)(ii) may be exercised. Within ten days after the action of the Board
ordering the redemption of the Rights, the Company shall give notice of such
redemption to 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 Separation Date, on the registry
books of the Transfer Agent for the Common Shares. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board may, at its option, at any time after
the right of the Company to redeem the Rights has expired or terminated
(although such right may be subject to restoration as a Springing Right of
Redemption or pursuant to Section 23(a)(ii) hereof), 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 "Exchange Ratio"). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary or 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 fifty percent (50%)
or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering
the exchange of any Rights pursuant to 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 Exchange Ratio. The Company shall
promptly give notice to the Rights Agent and public notice of any such exchange;
provided, however, that failure to give, or any defect in, such notice shall not
affect the validity
<PAGE>
38
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice that 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 Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights that
have become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Series A Shares for Common Shares at the
rate of one one-hundredth of a Series A Share for each Right.
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates that evidence
fractional Series A Shares (except as hereinafter provided) or fractional Common
Shares, but if the exchange is for Series A Shares, the Company shall be
obligated to issue fractional shares so long as any fraction of a Series A Share
so to be issued is at least equal to one one-hundredth of a Series A Share. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Rights Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share. For the purposes of this Section 24(d),
(i) the current market value of a whole Common Share shall be the per share
market price determined as of the day immediately following the day of the
public announcement by the Company that an exchange is to be effected pursuant
to this Section 24 and (ii) the current market value of a Series A Share or
fraction of a Series A Share shall be the current market value on such day of a
Series A Share (or fraction of a Series A Share) as determined in accordance
with Section 11(d)(ii) hereof.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Separation Date, (i) to pay any dividend payable in stock of any class
to the holders of Series A Shares or to make any other distribution to the
holders of Series A Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Series A Shares rights or warrants to subscribe
for or to purchase any additional Series A Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of Series A Shares
<PAGE>
39
(other than a reclassification involving only the subdivision of outstanding
Series A Shares), (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than
fifty percent (50%) of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of the Common Shares and/or Series A Shares, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the Series A Shares for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Series A Shares, whichever shall be the
earlier.
(b) In case of the occurrence of a Section 11(a)(ii)
Event, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, to the extent feasible
and 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 Section 11(a)(ii), and (ii) all references in the
preceding paragraph to Series A Shares shall be deemed thereafter to refer to
Common Shares and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
OrthoLogic Corp.
2850 South 36th Street
Phoenix, Arizona 85034
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
<PAGE>
40
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Bank of New York
One Wall Street
New York, NY 20286
Attention: Steve Myers
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Rights Agent.
Section 27. Supplements and Amendments. Prior to the
Separation Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares unless such
approval is required by Section 29(b), except for a supplement or amendment that
would change the Redemption Price, Final Expiration Date, Purchase Price, or
number of fractional Series A Shares for which a Right is then exercisable. From
and after the Separation Date (and at any time after the occurrence of a Shares
Acquisition Date subsequent to the occurrence of a Springing Right of
Redemption), the Company and the Rights Agent shall, if the Company shall so
direct, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provisions herein, (iii) to extend the period of redemption
provided in Section 23 hereof (which amendment shall set forth a date after
which the Rights are no longer redeemable ("Extension Date") unless the Rights
are further amended prior to the Extension Date to further extend the time
during that the Rights are redeemable, and which amendment may provide for the
termination of the right of redemption prior to any Extension Date 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 Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided further, that this
Agreement may not be supplemented or amended in any way after the period for
redemption of the Rights pursuant to Section 23 hereof shall have expired unless
there shall thereafter arise and be in effect a Springing Right of Redemption.
Upon the
<PAGE>
41
delivery of a certificate from an appropriate officer of the Company, which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Prior to the Separation Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of
Directors.
(a) For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular time
and any determination of the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner shall be made in accordance
with the provisions of Rule 13d-3(d)(1)(i) of the Rules as in effect as of the
date hereof. Subject to the provisions of paragraph (b) of this Section 29, the
Board (where specifically provided for, with the concurrence of the Independent
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 (where specifically provided for, with the concurrence of
the Independent 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 (ii) below, all omissions with
respect to the foregoing) that are done or made by the Board (where specifically
provided for, with the concurrence of the Independent Directors), in good faith,
shall (i) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Right Certificates and all other parties and (ii) not subject the
Board or the Independent Directors to any liability to the holders of the Right
Certificates.
(b) Notwithstanding anything in this Agreement to the
contrary, any actions by the Board pursuant to Section 11(a)(iii), Section
23(a), Section 24, Section 27 or Section 31, and any determinations concerning
the occurrence of any Triggering Event, shall require the concurrence of such
number of
<PAGE>
42
Independent Directors as shall constitute a majority of the Independent
Directors then in office; provided, however, that any such action approved by
the Board without such required concurrence of Independent Directors (whether or
not there shall then be Independent Directors in office) shall nevertheless be,
and be deemed to be, duly approved if such action is approved (at a meeting of
stockholders duly called and held upon at least thirty days prior written notice
to the shareholders) by the affirmative votes of two-thirds of all outstanding
Common Shares including the affirmative votes of the holders of at least
two-thirds of all outstanding Common Shares held as of the record date for such
meeting by persons other than an Acquiring Person or any Affiliate or Associate
of such Acquiring Person.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Separation 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 Right Certificates (and, prior to the Separation Date, the Common
Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
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 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.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware, and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; except for Sections 18, 19, 20
and 21 hereof which for all purposes shall be governed by and construed under
the laws of the State of New York. Any provision of this Agreement and each such
Right Certificate relating to the internal corporate governance or other affairs
of the Company shall be governed by and construed in accordance with
<PAGE>
43
the laws of the State of Delaware.
Section 33. Consequential Damages. Neither party to this
Agreement shall be liable to the other party for consequential damages.
Section 34. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall together constitute
but one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience of reference
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
<PAGE>
44
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
ORTHOLOGIC CORP.
By: /s/ Allen R. Dunaway
Name: Allen R. Dunaway
Title: VP, CFO &
Corporate Secretary
BANK OF NEW YORK
By: /s/ James Dimino
Name: James Dimino
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
ORTHOLOGIC CORP.
CERTIFICATE OF DESIGNATION
in respect of
SERIES A PREFERRED STOCK
------------------------
Pursuant to Section 151 of the
Delaware General Business Corporation Law
------------------------------------
The undersigned, being the Chairman and Chief Executive
Officer of OrthoLogic Corp. (the "Corporation"), a corporation organized and
existing under the Delaware General Corporation Law, hereby certifies that,
pursuant to the provisions of Section 151 of the Delaware General Corporation
Law, the Board of Directors of the Corporation duly adopted the following
resolution at a meeting of said Board of Directors duly called and held on
February 21, 1997, which resolution remains in full force and effect as of the
date hereof:
RESOLVED, that the Board of Directors of the
Corporation, pursuant to authority expressly vested in it by the
provisions of the Corporation's Amended and Restated Certificate of
Incorporation, as amended (the "Charter"), hereby establishes a series
of the Preferred Stock, par value $.0005 per share, of the Corporation
and fixes the number of shares of such series and the powers,
designations, preferences and relative, participating, optional or
other rights of such series, and the qualifications, limitations or
restrictions thereof, as follows:
The first series of Preferred Stock, par value $.0005 per
share, of the Corporation shall be, and hereby is, designated "Series A
Preferred Stock" (the "Series A Shares"), and the number of shares
constituting such series shall be Three Hundred Thousand (300,000). The
relative rights and preferences of the Series A Shares shall be as
follows:
<PAGE>
A-2
Section a. Dividends and Distributions.
(1) Subject to the prior and superior rights of the holders of
any shares of any series of stock ranking prior and superior to the
Series A Shares with respect to dividends, the holders of Series A
Shares, in preference to the holders of Common Stock, par value $.0005
per share, of the Corporation (the "Common Stock") and of any other
junior stock, shall be entitled to receive, when and as declared by the
Board of Directors, out of any funds lawfully available therefor, cash
dividends thereon, payable quarterly, from the date of issuance
thereof, upon the tenth days of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a Series A Share, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$10.00 or (b) subject to the provisions for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend or
distribution payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any Series A Share. In the
event the Corporation shall at any time after March 12, 1997 (i)
declare any dividend on the 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 amounts to which holders of Series A Shares were entitled
immediately prior to such event under clause (a) and clause (b) of the
preceding sentence shall be adjusted by multiplying each 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.
(2) The Corporation shall declare a dividend or distribution
on the Series A Shares as provided in paragraph (1) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend or distribution payable in shares of
Common Stock); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per
share on the Series A Shares
<PAGE>
A-3
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date; and provided further, that nothing contained in this
paragraph (2) shall be construed so as to conflict with any provision
relating to the declaration of dividends contained in the Charter.
(3) Dividends shall begin to accrue and be cumulative on
outstanding Series A Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Shares, 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 Series A
Shares 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 Series A Shares in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of Series A Shares
entitled to receive payment of a dividend or distribution declared
thereon.
Section b. Redemption. The Series A Shares are not redeemable.
Section c. Liquidation, Dissolution or Winding Up. In the
event of the voluntary or involuntary liquidation of the Corporation the
"preferential amount" that the holders of the Series A Shares shall be entitled
to receive out of the assets of the Corporation shall be $100.00 per share plus
all accrued and unpaid dividends thereon.
(1) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (upon liquidation, dissolution or winding up) to
the Series A Shares unless, prior thereto, the holders of Series A
Shares shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to
the holders of Series A
<PAGE>
A-4
Shares unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 100 (as appropriately adjusted
as set forth in paragraph (3) of this Section c to reflect such events
as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all
outstanding Series A Shares and Common Stock, respectively, holders of
Series A Shares and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to one with respect
to the Series A Shares and Common Stock, on a per share basis,
respectively.
(2) 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, that rank on a parity with the Series A
Shares, then all such available assets shall be distributed ratably to
the holders of the Series A Shares and the holders of such parity
shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then any such
remaining assets shall be distributed ratably to the holders of Common
Stock.
(3) In the event the Corporation shall at any time after March
12, 1997 (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 Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment
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.
Section d. Sinking Fund. The Preferred Shares shall not be
entitled to the benefit of any sinking fund for the redemption or purchase of
such shares.
<PAGE>
A-5
Section e. Conversion.
(1) Subject to paragraph (2) of this Section e, the Preferred
Shares shall not be convertible.
(2) 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
Series A Shares 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 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of Series A Shares shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event, and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
Section f. Voting Rights.
(1) The holders of Series A Shares shall have no voting rights
except as provided by Delaware statutes or by paragraph (2) of this
Section f.
(2) So long as any Series A Shares shall be outstanding, and
in addition to any other approvals or consents required by law, without
the consent of the holders of 66- 2/3% of the Series A Shares
outstanding as of a record date fixed by the Board of Directors, given
either by their affirmative vote at a special meeting called for that
purpose, or, if permitted by law, in writing without a meeting:
(i) The Corporation shall not sell, transfer or lease
all or substantially all the properties and assets of the
Corporation; provided, however, that nothing herein shall
require the consent of the holders of Series A Shares for or
in respect of the creation of
<PAGE>
A-6
any mortgage, pledge, or other lien upon all or any part of
the assets of the Corporation.
(ii) The Corporation shall not effect a merger or
consolidation with any other corporation or corporations
unless as a result of such merger or consolidation and after
giving effect thereto holders of Series A Shares are entitled
to receive a per share amount and type of consideration equal
to 100 times the per share amount and type of consideration
received by holders of shares of Common Stock, or (1) either
(A) the Corporation shall be the surviving corporation or (B)
if the Corporation is not the surviving corporation, the
successor corporation shall be a corporation duly organized
and existing under the laws of any state of the United States
of America or the District of Columbia, and all obligations of
the Corporation with respect to the Series A Shares shall be
assumed by such successor corporation, (2) the Series A Shares
then outstanding shall continue to be outstanding and (3)
there shall be no alteration or change in the designation or
the preferences, relative rights or limitations applicable to
outstanding Series A Shares prejudicial to the holders
thereof.
(iii) The Corporation shall not amend, alter or
repeal any of the provisions of its Certificate of
Incorporation in any manner that adversely affects the
relative rights, preferences or limitations of the Series A
Shares or the holders thereof.
Section g. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Shares as provided in Section a
are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on Series A Shares
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 (as to
dividends) to the Series A Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (as
to dividends) with the Series A Shares, except dividends paid
ratably on the Series A Shares and all such parity stock on
which dividends are payable or in arrears in proportion to the
total
<PAGE>
A-7
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (as to
dividends) to the Series A Shares; provided, however, that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation, ranking junior (as to
dividends) to the Series A Shares; and
(iv) purchase or otherwise acquire for consideration
any Series A Shares, or any shares of stock ranking on a
parity (as to dividends) with the Series A Shares, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(2) 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 (1) of this Section g, purchase or otherwise acquire such
shares at such time and in such manner.
Section h. Fractional Shares. The Corporation may issue
fractions and certificates representing fractions of Series A Shares in integral
multiples of 1/100th of a Series A Share, or in lieu thereof, at the election of
the Board of Directors of the Corporation at the time of the first issue of any
Series A Shares, evidence such fractions by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all rights, privileges and preferences to which they would
be entitled as beneficial owners of Series A Shares. In the event that
fractional Series A Shares are issued, the holders thereof shall have all the
rights provided herein for holders of full Series A Shares in the proportion
that such fraction bears to a full share.
<PAGE>
A-8
IN TESTIMONY WHEREOF, OrthoLogic Corp. has caused this
Certificate of Designation to be executed and acknowledged by its Chairman of
the Board and Chief Executive Officer, and attested by its Executive Vice
President, Research and Development, as of the 5th day of March, 1997.
ORTHOLOGIC CORP.
By: /s/ Allan M. Weinstein
-----------------------------
Name: Allan M. Weinstein
Title: Chairman and Chief
Executive Officer
ATTEST:
/s/ Frank P. Magee
- ------------------------------
Name: Frank P. Magee
Title: Executive Vice President
Research and Development
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER MARCH 11, 2007 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. 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
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT (AS HEREINAFTER DEFINED)) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS 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
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE AGREEMENT.]1
Right Certificate
ORTHOLOGIC CORP.
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 March 4, 1997
(the "Rights Agreement"), between OrthoLogic Corp., a Delaware corporation (the
"Company"), and Bank of New York, a New York corporation (the "Rights Agent"),
to purchase from the Company at any time after the Separation Date (as such term
is defined in the Rights Agreement) and prior to the close of business (5:00 PM
Phoenix, Arizona time) on March 11, 2007 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, nonassessable share of Series A Preferred Stock,
par value $.0005 per share ("Series A Share") of the Company, at a purchase
price of Twenty- Five Dollars ($25.00) per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related
- --------
(1) The portion of the legend in the brackets shall be inserted if applicable
and shall replace the preceding sentence.
<PAGE>
B-2
Certificate duly executed. The number of rights evidenced by this Right
Certificate (and the number of shares that may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of March 12, 1997, based on the Series A Shares
as constituted at such date.
Upon the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (a) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (b) a transferee of any such Acquiring Person, Associate or
Affiliate (other than a bona fide purchaser for value who has no knowledge that
the transferor was an Acquiring Person or an Associate or Affiliate of an
Acquiring Person) or (c) under certain circumstances specified in the Rights
Agreement, a transferee of a person or entity who, after such transfer, became
an Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such rights from and after the occurrence
of any such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of Series A Shares or other securities or other property
that may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
The Board may, at its option, at any time after the right of
the Company to redeem the Rights has expired or terminated (with certain
exceptions) exchange all or part of the then outstanding and exercisable Rights
(other than those held by the Acquiring Person and Affiliates and Associates of
the Acquiring Person) for Common Shares (as such term is defined in the Rights
Agreement) at an exchange ratio of one Common Share per Right, as adjusted.
Immediately upon the action of the Board ordering an exchange of the Rights, the
Rights affected by such order will no longer be exercisable and thereafter the
only right of the holders of such Rights will be to receive the Common Shares
issuable by the Company in exchange for such Rights.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights for not more than ninety (90) days at the election
of the Company and under certain circumstances specified in such Rights
Agreement.
<PAGE>
B-2
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Series A Shares as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If the Rights evidenced by this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed at a redemption price of One Cent
($0.01) per Right at any time prior to the close of business 10 Business Days
(as such term in defined in the Rights Agreement) after the Shares Acquisition
Date (as such term is defined in the Rights Agreement) unless the period for
redemption is extended as permitted in the Rights Agreement. Thereafter, the
Board of Directors of the Company ("Board") may only redeem the Rights in
certain specified circumstances including in connection with certain events not
involving an Acquiring Person or an Affiliate or Associate of an Acquiring
Person. In addition, the Company's right of redemption may be reinstated if,
among other things, an Acquiring Person reduces his beneficial ownership to ten
percent (10%) or less of the outstanding Common Shares of the Company in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board ordering redemption of the Rights, the Rights will
no longer be exercisable, except where the redemption is made in connection with
an event not involving an Acquiring Person or Affiliate or Associate of an
Acquiring Person (in which circumstance the effective time of the redemption may
be deferred); and, in general, thereafter the only right of the holders of the
Rights evidenced hereby will be to receive the Redemption Price.
The terms of the Rights evidenced by this Certificate may be
supplemented or amended without the approval of any holder of the Rights (or the
Common Shares) as set forth in the Rights Agreement.
No fractional Series A Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions that are integral
multiples of one one-hundredth of a
<PAGE>
B-4
Series A Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Series A Shares or of any other securities of the Company that 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 Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the
Company.
Dated: ______________, 19___
Countersigned ORTHOLOGIC CORP.
BANK OF NEW YORK ,
as Rights Agent
By:___________________________
Name:
By_______________________ Title:
Attest_____________________
Name:
Title:
(Corporate Seal)
<PAGE>
B-5
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of Transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________ attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ______________, 19___
------------------------------
Signature
Signature Guaranteed:
<PAGE>
B-6
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(i) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement);
(ii) to the best knowledge of the undersigned, it [ ] did [ ]
did not acquire the Rights evidenced by this Right Certificate from any Person
who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________, 19___ ______________________________
Signature
NOTICE
------
The signature(s) to the foregoing Assignment and Certificate
must correspond to the name(s) as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
B-7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: ORTHOLOGIC CORP.
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to purchase
the Series A Shares (or fractions thereof) issuable upon the exercise of such
Rights (or such other securities of the Company or of any other entity that may
be issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of:
Please insert social security
or other identifying number:____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
<PAGE>
B-8
Please insert social security
or other identifying number:____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: ______________, 19___
------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
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 Acquiring Person (as such terms
are defined in the Rights Agreement);
(2) to the best knowledge of the undersigned, it [ ] did [ ]
not acquire the Rights evidenced by this Right Certificate from any Person who
is, was or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _______________, 19___
------------------------------
Signature
<PAGE>
B-9
NOTICE
------
The signature(s) to the foregoing Election to Purchase and
Certificate must correspond to the name(s) as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT C
ORTHOLOGIC CORP.
Summary of Rights to Purchase Series A Preferred Stock
On February 21, 1997, the Board of Directors of OrthoLogic
Corp. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, par value $.0005 per share (a "Common
Share"), of the Company to stockholders of record at the close of business on
March 12, 1997 (the "Record Date"). Except as set forth below, each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Preferred Stock, par value $.0005 per share ("Series A
Shares"), at a price of $25.00 (the "Purchase Price"), subject to adjustment.
The Purchase Price shall be paid in cash. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Bank of New York, as Rights Agent.
Initially, no separate Right Certificates will be distributed.
Until the earlier to occur of (a) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares or (b) 15 business
days following the commencement of a tender offer or exchange offer if, upon
consummation hereof, such person or group would be the beneficial owner of 20%
or more of such outstanding Common Shares (the earlier of such dates being
called the "Separation Date"), the Rights will be evidenced, with respect to any
Common Shares outstanding as of the Record Date, by the certificates
representing such Common Shares. The Rights Agreement provides that, until the
Separation Date, the Rights will be transferred with, and only with, Common
Share certificates. From as soon as practicable after the Record Date and until
the Separation Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Separation Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificates. As soon as practicable following the Separation Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Separation Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
<PAGE>
C-2
The Rights are not exercisable until the Separation Date and
will expire on March 11, 2007, unless earlier redeemed by the Company as
described below.
In the event that, at any time following the Separation Date,
(a) the Company is the surviving corporation in a merger with an Acquiring
Person and the Company's Common Shares are not changed or exchanged, (b) a
person (other than the Company and its affiliates) becomes the beneficial owner
of 20% or more of the then outstanding Common Shares, (c) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement or (d) during such time as there is an Acquiring Person, an event
occurs that results in such Acquiring Person's ownership interest being
increased by more than one percent (e.g., a reverse stock split), the Rights
Agreement provides that proper provision shall be made so that each holder of a
Right will thereafter be entitled to receive, upon exercise, Common Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right.
In the event that, at any time following the first date of
public announcement by the Company or an Acquiring Person indicating that an
Acquiring Person has become such (the "Shares Acquisition Date"), (a) the
Company engages in a merger or other business combination transaction in which
the Company is not the surviving corporation, (b) the Company engages in a
merger or other business combination transaction with another person in which
the Company is the surviving corporation, but in which its Common Shares are
changed or exchanged or (c) 50% or more of the Company's assets or earning power
is sold or transferred, the Rights Agreement provides that proper provision
shall be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, common shares of the acquiring company having a value equal to two times
the exercise price of the Right.
The Board may, at its option, at any time after the right of
the Board to redeem the Rights has expired or terminated (with certain
exceptions), exchange all or part of the then outstanding and exercisable Rights
(other than those held by the Acquiring Person and Affiliates and Associates of
the Acquiring Person) for Common Shares at a ratio of one Common Share per
Right, as adjusted; provided, however, that such Right cannot be exercised once
a Person, together with such Person's Affiliates and Associates, becomes the
owner of 50% or more of the Outstanding Common Shares. If the Board authorizes
such an exchange, the Rights will immediately cease to be exercisable.
<PAGE>
C-3
Notwithstanding any of the foregoing, following the occurrence
of any of the events set forth in the fourth and fifth paragraphs of this
Summary, any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person shall
immediately become null and void.
The Purchase Price payable, and the number of Series A Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (a) in the event of
a dividend of Series A Shares on, or a subdivision, combination or
reclassification of, the Series A Shares, (b) upon the grant to holders of the
Series A Shares of certain rights or warrants to subscribe for Series A Shares
or securities convertible into Series A Shares at less than the current market
price of the Series A Shares or (c) upon the distribution to holders of the
Series A Shares of debt securities or assets (excluding regular quarterly cash
dividends and dividends payable in Series A Shares) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares that are not integral multiples
of one one-hundredth of a Series A Share will be issued and, in lieu thereof, an
adjustment in cash will be made based on the closing price of the Series A
Shares on the last trading date prior to the date of exercise.
At any time after the date of the Rights Agreement until 10
Business Days following the Shares Acquisition Date, the Board of Directors of
the Company (the "Board"), with the concurrence of a majority of the Independent
Directors (those members of the Board who are not officers or employees of the
Company or of any Subsidiary of the Company and who are not Acquiring Persons or
their Affiliates, Associates, nominees or representatives, and who either (a)
were members of the Board prior to the time any person became an Acquiring
Person or (b) were subsequently elected to the Board and were recommended for
election or approved by a majority of the Independent Directors then on the
Board), may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right, subject to adjustment (the "Redemption Price"). Thereafter, the Board may
only redeem the Rights in certain specified circumstances including in
connection with certain events not involving an Acquiring Person or an Affiliate
or Associate of an Acquiring Person. In addition, the Company's right of
redemption may be reinstated if (a) an Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding Common Shares in a transaction or
series of transactions not involving the Company and (b) there is at such
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time no other Acquiring Person. The Rights Agreement may also be amended, as
described below, to extend the period of redemption. Immediately upon the action
of the Board ordering redemption of the Rights, the Rights will no longer be
exercisable, except upon the occurrence of certain events that have the effect
of deferring the effective time of the redemption. In general, thereafter the
only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Shares (or other consideration) of the
Company or for common shares of the Acquiring Person as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board with the concurrence of a majority of the Independent
Directors or by special approval of the stockholders of the Company prior to the
Separation Date. Thereafter, the period during which the Rights may be redeemed
may be extended (by action of the Board, with the concurrence of a majority of
the Independent Directors or by special approval of the stockholders of the
Company), and other provisions of the Rights Agreement may be amended by action
of the Board with the concurrence of a majority of the Independent Directors or
by special approval of the shareholders of the Company; provided, however, that
(a) such amendment will not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) and (b) no amendment shall be
made at such time as the Rights are no longer redeemable (except for the
possibility of the right of redemption being reinstated as described above).
A copy of the Rights Agreement will be filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
