SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
EXOGEN, INC.
(Exact name of Registrant as specified in its charter)
Delaware 77-223208468
(State of incorporation (IRS Employer Identification No.)
or organization)
10 Constitution Avenue
P.O. Box 6860
Piscataway, New Jersey 08855
(Address of principal executive offices) (Zip Code)
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to be so registered
None
Name of each exchange on which each class is
to be registered
None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
Effective as of December 6, 1996, pursuant to a Preferred Shares Rights
Agreement (the "Rights Agreement") between Exogen, Inc. (the "Company") and
Registrar and Transfer Company, as Rights Agent (the "Rights Agent"), the
Company's Board of Directors declared a dividend of one right (a "Right") to
purchase one one-hundredth share of the Company's Series A Participating
Preferred Stock ("Series A Preferred") for each outstanding share of Common
Stock, par value $0.0001 per share ("Common Shares"), of the Company. The
dividend is payable on December 19, 1996 (the "Record Date") to stockholders of
record as of the close of business on that date. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Preferred at an exercise price of $30.00 (the "Purchase Price"),
subject to adjustment in the event the Company declares a dividend on the Common
Stock payable in Common Stock, subdivides the number of outstanding shares of
Common Stock into a larger number of such shares or combines the number of
outstanding shares of Common Stock into a smaller number of such shares, among
other circumstances. In addition, under certain circumstances described more
fully herein, the Rights may become exercisable for a number of shares of Common
Stock having a value equal to two times the Purchase Price and/or Common Stock
of certain acquiring companies having a value equal to two times the Purchase
Price.
The following summary of the principal terms of the Rights Agreement is
a general description only and is subject to the detailed terms and conditions
of the Rights Agreement. A copy of the Rights Agreement is attached as Exhibit
99.1 to this Registration Statement and is incorporated herein by reference;
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Rights Agreement.
Certain Anti-takeover Effects
The Rights approved by the Board are designed to protect and maximize
the value of the outstanding equity interests in the Company in the event of an
unsolicited attempt by an acquiror to take over the Company, in a manner or on
terms not approved by the Board of Directors. Takeover attempts frequently
include coercive tactics to deprive the Company's Board of Directors and its
stockholders of any real opportunity to determine the destiny of the Company.
The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of a 15% or greater
position to be followed by a merger or a partial or two-tier tender offer that
does not treat all stockholders equally. These tactics can operate to unfairly
pressure stockholders, force them out of their investment and deprive them of
the full value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. The Rights may be redeemed by the Company at $.01 per Right
within ten days (or on such later date as may be determined by a majority of the
Board of Directors, excluding directors affiliated with an Acquiring Person)
after the accumulation of 15% or more of the Company's shares by a single
acquiror or group. Accordingly, the Rights should not interfere with any merger
or business combination approved by the Board of Directors.
<PAGE>
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on terms or in a manner not approved by the
Company's Board of Directors, except pursuant to an offer conditioned upon the
negation, purchase or redemption of the Rights. As a result, while the Rights
may provide the Board with leverage to obtain a higher price from a potential
acquiror, they may also prevent or deter offers not approved by the Board, and
therefore deprive stockholders, without providing them with the opportunity to
vote thereon, of the benefits of offers which may be at a higher price than the
current market price of the Company's Common Stock. In addition, assuming an
active trading market in the Rights themselves does not develop, stockholders
with lesser financial means might not be able to take full economic advantage of
the Rights. Further, the implementation of a rights plan may heighten the
susceptibility of the Company to greenmail by stockholders who threaten to
acquire a sufficient equity position to pass the Rights' triggering threshold,
although the Board can respond to any such action by redeeming the Rights at
$.01 per Right.
Issuance of the Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans. The issuance of
the Rights themselves has no dilutive effect, will not affect reported earnings
per share, should not be taxable to the Company or to its stockholders, and will
not change the way in which the Company's shares are presently traded. The
Company's Board of Directors believes that the Rights represent a sound and
reasonable means of addressing the complex issues of corporate policy created by
the current takeover environment.
Rights Evidenced by Common Share Certificates
The Rights will not be exercisable until the Distribution Date (defined
below). Prior to the Distribution Date, certificates for the Rights ("Rights
Certificates") will not be sent to stockholders and the Rights will attach to
and trade only together with the Common Shares. Accordingly, Common Share
certificates outstanding on the Record Date will evidence the Rights related
thereto, and Common Share certificates issued after the Record Date but prior to
the Distribution Date will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender or transfer of any certificates for Common Shares,
even without notation or a copy of the Summary of Rights being attached thereto
(but as to certificates representing Common Shares issued after the Record Date,
only if they bear the legend required by the Rights Agreement), will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
<PAGE>
Distribution Date
The Rights will separate from the Common Shares, Rights Certificates
will be issued and the Rights will become exercisable upon the earlier of: (i)
10 days (or such later date as may be determined by a majority of the Board of
Directors, excluding directors affiliated with the Acquiring Person, as defined
below (the "Continuing Directors")) following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares, or (ii) 10 days (or such later date as may be
determined by a majority of the Continuing Directors) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 15% or more of the outstanding Common Shares. The earlier of such
dates is referred to as the "Distribution Date."
Issuance of Rights Certificates; Expiration of Rights
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights from and after the Distribution Date. All Common
Shares issued prior to the Distribution Date will be issued with Rights. Common
Shares issued after the Distribution Date may be issued with Rights if such
shares are issued (i) upon the conversion of outstanding convertible debentures
or any other convertible securities issued after adoption of the Rights
Agreement or (ii) pursuant to the exercise of stock options or under employee
benefit plans or arrangements unless such issuance would result in (or create a
risk that) such options, plans or arrangements would not qualify for otherwise
available special tax treatment. Except as otherwise determined by the Board of
Directors, no other Common Shares issued after the Distribution Date will be
issued with Rights. The Rights will expire on the earliest of (i) December 19,
2006 (the "Final Expiration Date"), (ii) redemption or exchange of the Rights as
described below, or (iii) consummation of an acquisition of the Company
satisfying certain conditions by a person who acquired shares pursuant to a
Permitted Offer as described below.
Initial Exercise of the Rights
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $30.00 per Right, one one-hundredth share of the
Series A Preferred, subject to adjustment in the event the Company declares a
dividend on the Common Shares payable in Common Shares, subdivides the number of
outstanding Common Shares into a larger number of such shares or combines the
number of outstanding Common Shares into a smaller number of such shares, among
other circumstances. In addition, under certain circumstances described more
fully herein, the Rights may become exercisable for Common Shares having a value
equal to two times the Purchase Price and/or Common Stock of certain acquiring
companies having a value equal to two times the Purchase Price.
<PAGE>
Right to Buy Company Common Shares
Unless the Rights are earlier redeemed, in the event that an Acquiring
Person becomes the beneficial owner of 15% or more of the Company's Common
Shares then outstanding (other than pursuant to a Permitted Offer), then proper
provision will be made so that each holder of a Right which has not theretofore
been exercised (other than Rights beneficially owned by the Acquiring Person,
which will thereafter be void) will thereafter have the right to receive, upon
exercise and payment of the Purchase Price, Common Shares having a value equal
to two times the Purchase Price. For example, if the market price of Common
Shares on the Shares Acquisition Date (as defined below) was $15.00, a person
holding one Right could purchase four (4) Common Shares upon exercise of such
Right ($30.00/$7.50), whereas he/she could only purchase two (2) Common Shares
($30.00/$15.00) in the absence of such Rights. Rights are not exercisable
following the occurrence of an event as described above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that the Company does not have sufficient Common Shares
available for all Rights to be exercised, or the Board decides that it is
necessary and not contrary to the interests of Rights holders to do so, the
Company may instead substitute cash, assets or other securities for the Common
Shares for which the Rights would have been exercisable under this provision.
Right to Buy Acquiring Company Stock
Similarly, unless the Rights are earlier redeemed, in the event that,
after the Shares Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business) (either of which event is referred to herein as an
"Acquisition"), proper provision must be made so that each holder of a Right
which has not theretofore been exercised (other than Rights beneficially owned
by the Acquiring Person, which will thereafter be void) will thereafter have the
right to receive, upon exercise, shares of Common Stock of the acquiring company
having a value equal to two times the Purchase Price (unless the transaction
satisfies certain conditions and is consummated with a person who acquired
shares pursuant to a Permitted Offer, in which case the Rights will expire). So
(assuming no satisfaction of such conditions) if for example the market price of
the acquiror's stock on the date of the Acquisition were $7.50, a person holding
one Right could purchase eight (8) shares of the acquiror's Common Stock upon
exercise of such Right ($30.00/$3.75), whereas he could only purchase four (4)
shares of acquiror's Common Stock ($30.00/$7.50) in the absence of such Rights.
Permitted Offer
A Permitted Offer means a tender offer for all outstanding Common
Shares that has been determined by a majority of the Continuing Directors to be
adequate and otherwise in the best interests of the Company and its
stockholders. Where the Board of Directors has determined that a tender offer
constitutes a Permitted Offer, the Rights will not become exercisable to
purchase Common Shares or shares of the acquiring company (as the case may be)
at the discounted price described above.
<PAGE>
Exchange Provision
At any time after the acquisition by an Acquiring Person of 15% or more
of the Company's outstanding Common Shares and prior to the acquisition by such
Acquiring Person of 50% or more of the Company's outstanding Common Shares, the
Board of Directors of the Company, following the approval of a majority of the
Board of Directors and a majority of the Continuing Directors, may exchange the
Rights (other than Rights owned by the Acquiring Person), in whole or in part,
at an exchange ratio of one Common Share per Right.
Redemption
At any time on or prior to the close of business on the earlier of (i)
the 10th day following the acquisition by an Acquiring Person (the "Shares
Acquisition Date") or such later date as may be determined by a majority of the
Continuing Directors and publicly announced by the Company, or (ii) the Final
Expiration Date of the Rights, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right.
Adjustments to Prevent Dilution
The Purchase Price payable, the number of Rights and the number of
Series A Preferred or Common Shares or other securities or property issuable
upon exercise of the Rights are subject to adjustment from time to time in
connection with the dilutive issuances by the Company as set forth in the Rights
Agreement. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
Cash Paid Instead of Issuing Fractional Shares
No fractional portion less than integral multiples of one one-hundredth
of a Preferred Share will be issued upon exercise of a Right and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading date prior to the date of exercise.
No Stockholders' Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company (other than any rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
Amendment of Rights Agreement
The provisions of the Rights Agreement may be supplemented or amended
by the Board of Directors in any manner prior to the close of business on the
Distribution Date without the approval of Rights holders. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not redeemable
or there are not Continuing Directors, the majority of which agree to such
adjustment.
<PAGE>
Rights and Preferences of the Series A Preferred
Series A Preferred purchasable upon exercise of the Rights will not be
redeemable. Each share of Series A Preferred will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Series A Preferred will be entitled to a minimum
preferential liquidation payment equal to $100 per share. Each share of Series A
Preferred will have 100 votes, voting together with the Common Shares. In the
event of any merger, consolidation or other transaction in which the Common
Shares are changed or exchanged, each share of Series A Preferred will be
entitled to receive 100 times the amount received per Common Share. These rights
are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights of
the shares of Series A Preferred, the value of the one one-hundredth interest in
a share of Series A Preferred purchasable upon exercise of each Right should
approximate the value of one Common Share.
<PAGE>
Item 2. Exhibits.
Exhibit
99.1 Preferred Share Rights Agreement, dated as of
December 6, 1996, between Exogen, Inc. and
Registrar and Transfer Company, including the
Certificate of Determination, the form of
Rights Certificate and the Summary of Rights
attached thereto as Exhibits A, B and C,
respectively.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
EXOGEN, INC.
Date: December 10, 1996
By: /s/ PATRICK A. MCBRAYER
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Patrick A. McBrayer
President and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
--- -------
99.1 Preferred Share Rights Agreement, dated as of
December 6, 1996, between Exogen, Inc. and
Registrar and Transfer Company, including the
Certificate of Determination, the form of Rights
Certificate and the Summary of Rights attached thereto as
Exhibits A, B and C, respectively.
EXOGEN, INC.
and
REGISTRAR AND TRANSFER COMPANY
(Rights Agent)
RIGHTS AGREEMENT
DATED AS OF DECEMBER 6, 1996
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions
Section 2. Appointment of Rights Agent
Section 3. Issuance of Rights Certificates
Section 4. Form of Rights Certificates
Section 5. Countersignature and Registration
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
Section 8. Cancellation and Destruction of Rights Certificates
Section 9. Reservation and Availability of Preferred Shares
Section 10. Preferred Shares Record Date
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power
Section 14. Fractional Rights and Fractional Shares
Section 15. Rights of Action
Section 16. Agreement of Rights Holders
Section 17. Rights Certificate Holder Not Deemed a Stockholder
Section 18. Concerning the Rights Agent
Section 19. Merger or Consolidation or Change of Name of Rights Agent
Section 20. Duties of Rights Agent
Section 21. Change of Rights Agent
Section 22. Issuance of New Rights Certificates
Section 23. Redemption
Section 24. Exchange
Section 25. Notice of Certain Events
<PAGE>
Section 26. Notices
Section 27. Supplements and Amendments
Section 28. Successors
Section 29. Determinations and Actions by the Board of Directors, etc.
Section 30. Benefits of this Agreement
Section 31. Severability
Section 32. Governing Law
Section 33. Counterparts
Section 34. Descriptive Headings
EXHIBITS
Exhibit A Form of Certificate of Designation
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
<PAGE>
RIGHTS AGREEMENT
Rights Agreement, dated as of December 6, 1996 (the "Agreement"),
between Exogen, Inc., a Delaware corporation (the "Company"), and Registrar and
Transfer Company (the "Rights Agent").
On December 6, 1996 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend of one Preferred
Share purchase right (a "Right") for each Common Share (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on December 19, 1996 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a share of Series A Participating Preferred Stock
(as such number may be adjusted pursuant to the provisions of this Agreement),
having the rights, preferences and privileges set forth in the form of
Certificate of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock attached hereto as Exhibit A, upon the terms and
subject to the conditions herein set forth, and further authorized and directed
the issuance of one Right (as such number may be adjusted pursuant to the
provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the Distribution
Date and the Expiration Date (as such terms are hereinafter defined), and in
certain circumstances after the Distribution Date.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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 be the Beneficial Owner
of 15% or more of the Common Shares then outstanding, but shall not
include:
(i) the Company;
(ii) any Subsidiary of the Company;
(iii) 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;
(iv) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of Common Shares outstanding
due to the repurchase of Common Shares by the Company, unless and
until such Person shall thereafter purchase or otherwise become
the Beneficial Owner of additional Common Shares constituting 1%
or more of the Common Shares outstanding at the time that such
Person becomes the Beneficial Owner of 15% or more of the then
outstanding Common Shares.
<PAGE>
Notwithstanding the foregoing, "Acquiring Person" shall not include any
Person whose ownership of 15% or more of the Common Shares then outstanding
results from any action, transaction or series of transactions approved in
advance by a majority of the Continuing Directors of the Company who are not
Affiliates or Associates of such Person or representatives of such Person or of
any such Affiliate or Associate (provided that such Person shall become an
Acquiring Person if such Person shall thereafter purchase or otherwise become
the Beneficial Owner of additional Common Shares constituting 1% or more of the
then outstanding Common Shares unless otherwise approved in advance by a
majority of the Continuing Directors who are not Affiliates or Associates of
such Person or representatives of such Person or of any such Affiliate or
Associate); provided, however, that any transfer of Common Shares by such Person
to a third party (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or any trustee in respect thereof acting in
such capacity) who after such transfer owns 15% or more of the Common Shares
then outstanding will cause the Rights to become exercisable at the time and in
the manner provided for herein, unless such transferee's ownership of 15% or
more of the Common Shares is approved in advance by a majority of the Continuing
Directors who are not Affiliates or Associates of such transferee or
representatives of such transferee or of any such Affiliate or Associate. If the
Continuing Directors of the Company determine in good faith that a Person who
would otherwise be an "Acquiring Person" as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purpose of this Agreement.
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3
thereunder (or any comparable or successor law or regulation);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed pursuant to this Section
1(c)(ii)(A) the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
<PAGE>
or Associates until such tendered securities are accepted for
purchase or exchange, or (2) securities which a Person or any of
such Person's Affiliates or Associates may be deemed to have the
right to acquire pursuant to any merger or other acquisition
agreement between the Company and such Person (or one or more of
its Affiliates or Associates) if such agreement has been approved
by the Board of Directors of the Company prior to there being an
Acquiring Person; or (B) the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security under this subparagraph (ii)(B)
of this paragraph (c) as a result of an agreement, arrangement or
understanding to vote such security if such agreement,
arrangement or understanding: (1) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulation under the Exchange
Act, and (2) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding,
whether or not in writing (other than customary agreements with
and between underwriters and selling group members with respect
to a bona fide public offering of securities), for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to subparagraph (ii)(B) of this paragraph (c)) or
disposing of any securities of the Company; provided, however,
that in no case shall an officer or director of the Company be
deemed (x) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by
reason of actions undertaken by such persons in their capacity as
officers or directors of the Company or (y) the Beneficial Owner
of securities held of record by the trustee of any employee
benefit plan of the Company or any Subsidiary of the Company for
the benefit of any employee of the Company or any Subsidiary of
the Company, other than the officer or director, by reason of any
influence that such officer or director may have over the voting
of the securities held in the plan.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Delaware or
California 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.,
California time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., California time, on the
next succeeding Business Day.
<PAGE>
(g) "Common Shares" shall mean the shares of Common Stock, par value
$0.0001, of the Company, except that "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) "common stock equivalents" shall have the meaning set forth in
Section 11(a)(iv) hereof.
(i) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while a member of the Board of Directors, who
is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, and who was a member of the Board of
Directors on the date that the Board of Directors initially approved
this Agreement, or (ii) any Person who subsequently becomes a member of
the Board of Directors, while a member of the Board of Directors, who
is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, if such Person's nomination for election
or election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors.
(j) "current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iv) hereof.
(l) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day (or such later date as may be determined by
action of a majority of Continuing Directors then in office) after the
Shares Acquisition Date (or, if the tenth day after the Shares
Acquisition Date occurs before the Record Date, the Close of Business
on the Record Date) or (ii) the Close of Business on the tenth day (or
such later date as may be determined by action of a majority of
Continuing Directors then in office) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act,
if, assuming the successful consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding.
(m) "Equivalent Shares" shall mean Preferred Shares and any other class
or series of capital stock of the Company which is entitled to
participate in dividends and other distributions, including
distributions upon the liquidation, dissolution or winding up of the
Company, on a proportional basis with the Common Shares. In calculating
the number of any class or series of Equivalent Shares for purposes of
Section 11 of this Rights Agreement, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled
to the same dividend or distribution as a whole Common Share shall be
deemed to be one share.
<PAGE>
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Exchange Fraction" shall have the meaning set forth in Section
11(p) hereof.
(p) "Exchange Ratio" shall have the meaning set forth in Section 11(a)
hereof.
(q) "Expiration Date" shall mean the earlier of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date, (iii)
the time at which the Board of Directors orders the exchange of the
Rights as provided in Section 24 hereof, or (iv) the consummation of a
transaction contemplated by Section 13(d) hereof.
(r) "Final Expiration Date" shall mean December 19, 2006.
(s) "Nasdaq" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.
(t) "Permitted Offer" shall mean a tender offer for all outstanding
Common Shares made in the manner prescribed by Section 14(d) of the
Exchange Act and the rules and regulations promulgated thereunder;
provided, however, that such tender offer occurs at a time when
Continuing Directors are in office and a majority of the Continuing
Directors then in office has determined that the offer is both adequate
and otherwise in the best interests of the Company and its stockholders
(taking into account all factors that such Continuing Directors deem
relevant).
(u) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of
such entity.
(v) "Post Transferee" shall have the meaning set forth in Section 7(e)
hereof.
(w) "Preferred Shares" shall mean shares of Series A Participating
Preferred Stock of the Company.
(x) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(y) "Prior Transferee" shall have the meaning set forth in Section 7(e)
hereof.
(z) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(aa) "Ratio of Exchange" shall have the meaning set forth in Section
24(a) hereof.
(ab) "Record Date" shall have the meaning set forth in the recitals at
the beginning of this Agreement.
(ac) "Redemption Date" shall mean the time at which the Board of
Directors of the Company orders redemption of the Rights as provided in
Section 23 hereof.
<PAGE>
(ad) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(ae) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals at the beginning of this Agreement.
(af) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iv) hereof.
(ag) "Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
(ah) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ai) "Spread" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(aj) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such; provided that, if such person is determined not
to have become an Acquiring Person pursuant to Section 1(a) hereof,
then no Shares Acquisition Date shall be deemed to have occurred.
(ak) "Subsidiary" of any Person shall mean any corporation or other
entity of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having similar authority of such
corporation or other entity is Beneficially Owned, directly or
indirectly, by such Person.
(al) "Substitution Period" shall have the meaning set forth in Section
(am) "Total Exercise Price" shall have the meaning set forth in Section
4(a) hereof.
(an) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(ao) A "Triggering Event" shall be deemed to have occurred upon any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such Person,
becoming an Acquiring Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. Contemporaneously with any such appointment, the Company shall notify
the Rights Agent thereof.
<PAGE>
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and (ii) the
right to receive Rights Certificates will be transferable only in
connection with the transfer of Common Shares. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of
such certificates for Common Shares shall also constitute the surrender
for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (a "Rights Certificate"), evidencing one
Right for each Common Share so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per
Common Share has been made pursuant to Section 11(a)(i), Section 11(i)
or Section 11(p) hereof, then at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates and may be transferred by the transfer of the
Rights Certificates as permitted hereby, separately and apart from any
transfer of one or more Common Shares, and the holders of such Rights
Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders thereof.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(c) Unless the Board of Directors by resolution adopted at or before
the time of the issuance (including pursuant to the exercise of rights
under the Company's benefit plans) of any Common Shares specifies to
the contrary, Rights shall be issued in respect of all Common Shares
that are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances
provided in Section 22 hereof, after the Distribution Date.
Certificates representing such Common Shares shall also be deemed to be
certificates for Rights, and shall bear the following legend:
<PAGE>
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Exogen, Inc. and Registrar and Transfer Company, as Rights
Agent, dated as of December 6, 1996 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Exogen, Inc. 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. Exogen, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Shares shall also be the registered
holders of the associated Rights, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event
that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated
with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Common Shares and of assignment to be printed on the reverse thereof)
shall be substantially in the form of Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date (or in the case of Rights issued with
respect to Common Shares issued by the Company after the Record Date,
as of the date of issuance of such Common Shares) and on their face
shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at
<PAGE>
the price set forth therein (such exercise price per one one-hundredth
of a Preferred Share being hereinafter referred to as the "Purchase
Price" and the aggregate exercise price of all Preferred Shares
issuable upon exercise of one Right being hereinafter referred to as
the "Total Exercise Price"), but the number and type of securities
purchasable upon the exercise of each Right and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring
Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement between Exogen,
Inc. and Registrar and Transfer Company, as Rights Agent,
dated as of December 6, 1996 (the "Rights Agreement")).
Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its
President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal (if any)
or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by the Rights
Agent, either manually or by facsimile signature, and shall not be
valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent
<PAGE>
and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, at the actual date of the
signing of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
signing of this Agreement such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purposes, books for
registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at
any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to
Sections 7(e), 14 and 24 hereof, countersign and deliver to the person
entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to
the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price for each one-hundredth of a Preferred Share as to which
the Rights are exercised, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be Thirty
Dollars ($30.00), shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the number of one
one-hundredths of a Preferred Share (or other securities or property,
as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 9 hereof in cash, or by
certified check or cashier's check payable to the order of the Company,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent
for the Preferred Shares) a certificate or certificates for the number
of one one-hundredths of a Preferred Share to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with
all such requests or (B) if the Company shall have elected to deposit
the total number of one one-hundredths of a Preferred Share issuable
upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent of depositary receipts
representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer
agent with the 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) 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 Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced (including to zero) pursuant to Section
11(a)(iv) hereof) may be made in cash or by certified bank check or
<PAGE>
bank draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered
holder of such Rights Certificate or to his or her duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such (a "Post
Transferee"), (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance
of this Section 7(e) (a "Prior Transferee") or (iv) any subsequent
transferee receiving transferred Rights from a Post Transferee or a
Prior Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and
no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that
the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights
Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for 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.
<PAGE>
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best efforts
to cause to be reserved and kept available out of and to the extent of
its authorized and unissued shares of Preferred Stock not reserved for
another purpose (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities), the number of Preferred Shares (and, following the
occurrence of the Triggering Event, Common Stock and/or other
securities) that will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares on
a national securities exchange, then so long as the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) issuable and deliverable upon exercise of the
Rights may be listed on such exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely that
the Rights will be exercised), all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance
with Section 11(a)(iv) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a registration
statement under the Securities Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the date as of which the
Rights are no longer exercisable for such securities. A majority of the
Continuing Directors may cause the Company temporarily to suspend, for
a period not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to enable the Company to prepare
and file such registration statement and permit it to become effective.
<PAGE>
Upon any such suspension, the Company shall issue a public announcement
stating, and notify the Rights Agent, that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
and notification to the Rights Agent at such time as the suspension is
no longer in effect. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained, or an exemption therefrom shall be available,
and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such Preferred Shares (subject to payment of the Purchase Price),
be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of certificates for Preferred Shares upon
the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or the issuance
or delivery of certificates or depositary receipts for Preferred Shares
in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary receipts for Preferred Shares
upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at
the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for a number of one one-hundredths of a Preferred Share is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such Preferred Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share with respect
to which the Rights have been exercised (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
<PAGE>
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of shares or other property
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine
the outstanding Common Shares (by reverse stock split or otherwise)
into a smaller number of Common Shares, or (D) issue any shares of its
capital stock in a reclassification of the Common Shares (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), then, in
each such event, except as otherwise provided in this Section 11(a) and
Section 7(e) hereof: (1) each of the Rights outstanding at the time of
the record date for such dividend or the effective date of such
subdivision, combination or reclassification shall be proportionately
adjusted to that number of Rights (calculated to the nearest one
ten-thousandth of a Right) equal to a fraction (the "Exchange Ratio"),
the numerator of which shall be the total number of Common Shares or
shares of capital stock issued in such reclassification of the Common
Shares outstanding immediately following such time and the denominator
of which shall be the total number of Common Shares outstanding
immediately prior to such time, and the number of Rights that shall
thereafter be issued with respect to each Common Share or share of such
other capital stock that shall become outstanding thereafter prior to
the Distribution Date shall be equal to the total number of outstanding
Rights immediately after such event (as adjusted pursuant to this
clause (1)) divided by the total number of outstanding Common Shares or
shares of such other capital stock immediately after such event
(subject to further adjustment pursuant to the provisions of this
Agreement); (2) the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Purchase
Price thereafter shall equal the result obtained by dividing the
Purchase Price in effect immediately prior to such time by the Exchange
Ratio; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon
exercise of such Right; and (3) the number of Preferred Shares or
shares of such other capital stock issuable upon the exercise of each
Right shall remain unchanged immediately after such event, but, in the
event of a reclassification, the kind of shares issuable upon the
exercise of each Right immediately after such reclassification shall be
appropriately adjusted. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
<PAGE>
(ii) Subject to Section 24 of this Agreement, in the event a Triggering
Event shall have occurred, then promptly following such Triggering
Event, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the
right to receive for each Right, upon exercise thereof in accordance
with the terms of this Agreement and payment of the then-current Total
Exercise Price, in lieu of a number of one one-hundredths of a
Preferred Share, such number of Common Shares of the Company as shall
equal the result obtained by multiplying the then-current Purchase
Price by the then number of one one-hundredths of a Preferred Share for
which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first
occurrence of a Triggering Event, and dividing that product by 50% of
the current per share market price (determined pursuant to Section
11(d) hereof) for Common Shares on the date of occurrence of the
Triggering Event (such number of shares being hereinafter referred to
as the "Adjustment Shares").
(iii) The right to buy Common Shares of the Company pursuant to Section
11(a)(ii) hereof shall not arise as a result of any Person becoming an
Acquiring Person through an acquisition of Common Shares pursuant to a
Permitted Offer.
(iv) In lieu of issuing Common Shares in accordance with Section
11(a)(ii) hereof, the Company may, if the Board of Directors determines
that such action is necessary or appropriate and not contrary to the
interest of holders of Rights (and, in the event that the number of
Common Shares which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights, or if any necessary regulatory approval
for such issuance has not been obtained by the Company, the Company
shall): (A) determine the excess of (1) the value of the Common Shares
issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread") and (B) with respect to
each Right, make adequate provision to substitute for such Common
Shares, upon exercise of the Rights, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of
preferred stock which the Board of Directors of the Company has deemed
to have the same value as Common Shares (such shares or units of shares
of preferred stock are herein called "common stock equivalents")),
except to the extent that the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has
not obtained any necessary stockholder or regulatory approval for such
issuance, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
<PAGE>
(30) days following the later of (x) the first occurrence of a
Triggering Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available), except to the extent
that the Company has not obtained any necessary stockholder or
regulatory approval for such issuance, and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares or take action
to obtain such regulatory approval (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iv), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares, to take any action to obtain
any required regulatory approval and/or to decide the appropriate form
of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iv), the value of the Common
Shares shall be the current per share market price (as determined
pursuant to Section 11(d) hereof) of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Shares on such
date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or
warrants to all holders of Common Shares or of any class or series of
Equivalent Shares entitling such holders (for a period expiring within
forty-five (45) calendar days after such record date) to subscribe for
or purchase Common Shares or Equivalent Shares or securities
convertible into Common Shares or Equivalent Shares at a price per
share (or having a conversion price per share, if a security
convertible into Common Shares or Equivalent Shares) less than the then
current per share market price of the Common Shares or Equivalent
Shares (as defined in Section 11(d)) on such record date, then, in each
such case, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares and Equivalent Shares (if
any) outstanding on such record date, plus the number of Common Shares
<PAGE>
or Equivalent Shares, as the case may be, which the aggregate offering
price of the total number of Common Shares or Equivalent Shares, as the
case may be, so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at
such current market price, and the denominator of which shall be the
number of Common Shares and Equivalent Shares (if any) outstanding on
such record date, plus the number of additional Common Shares or
Equivalent Shares, as the case may be, to be offered for subscription
or purchase (or into which the convertible securities so to be offered
are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights. Common
Shares and Equivalent Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all
holders of the Common Shares or of any class or series of Equivalent
Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other
than a regular quarterly cash dividend, if any, or a dividend payable
in Common Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), then, in each such
case, the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the current market price (as determined pursuant to Section 11(d)
hereof) of a Common Share or an Equivalent Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a Common Share or
Equivalent Shares, as the case may be, and the denominator of which
shall be such current market price (as determined pursuant to Section
11(d) hereof) of a Common Share or Equivalent Shares on such record
date. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
<PAGE>
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iv) hereof, the "current
per share market price" of any security (a "Security" for the purpose
of this Section 11(d)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iv) hereof, the "current per share market
price" of any Security on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the ten (10)
consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the current per share market price of
the Security is determined during a period following the announcement
by the issuer of such Security of (i) a dividend or distribution on
such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, after
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any national
securities exchange, the last sale price or, if such last sale price is
not reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Shares, the
fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business
Day. If the Common Shares are not publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
<PAGE>
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest ten-thousandth of a Common
Share or other share or ten-thousandth of a Preferred Share, as the
case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction
which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right and if required, the Purchase Price thereof,
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Sections 11(a), (b), (c),
(e), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(b), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of Preferred Shares (calculated to the nearest one
ten-thousandth of a share) obtained by (i) multiplying (x) the number
of Preferred Shares 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 as a result of the calculations made in Section 11(b) to
adjust the number of Rights, in substitution for any adjustment in the
number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to
<PAGE>
the nearest one ten-thousandth of a Right) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing
all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a
Preferred Share and the number of one one-hundredths of a Preferred
Share which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par or stated value, if any, of the number
of one one-hundredths of a Preferred Share issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue as fully paid and nonassessable shares such
number of one one-hundredths of a Preferred Share at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the number of one one-hundredths of
a Preferred Share and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one
one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) upon the
occurrence of the event requiring such adjustment.
<PAGE>
(m) Anything in this Section 11 to the contrary notwithstanding, prior
to the Distribution Date, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in
its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred or Common Shares,
(ii) issuance wholly for cash of any Preferred or Common Shares at less
than the current market price, (iii) issuance wholly for cash of
Preferred or Common Shares or securities which by their terms are
convertible into or exchangeable for Preferred or Common Shares, (iv)
stock dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to
holders of its Preferred or Common Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Triggering
Event or Section 13 Event, if (i) at the time or immediately after such
Triggering Event or Section 13 Event there are any rights, warrants or
other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (ii) prior to, simultaneously
with or immediately after such Section 13 Event, the stockholders of
the Person who constitutes, or would constitute, the "Principal Party"
for purposes of Section 13(b) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Sections 23, 24 or 27 hereof, take
(or permit to be taken) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares (by reverse stock split or otherwise) into
a smaller number of Preferred Shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), then,
in each such event, except as otherwise provided in this Section 11 and
Section 7(e) hereof: (1) each of the Rights outstanding at the time of
the record date for such dividend or the effective date of such
subdivision, combination or reclassification shall be proportionately
adjusted to that number of Rights (calculated to the nearest one
ten-thousandth of a Right) equal to a fraction (the "Exchange
Fraction"), the numerator of which shall be the total number of
<PAGE>
Preferred Shares or shares of capital stock issued in such
reclassification of the Preferred Shares outstanding immediately
following such time and the denominator of which shall be the total
number of Preferred Shares outstanding immediately prior to such time,
and the number of Rights that shall thereafter be issued with respect
to each Common Share or share of other capital stock that shall be
issued in a reclassification of the Common Shares prior to the
Distribution Date shall be equal to the total number of outstanding
Rights immediately after such event (as adjusted pursuant to this
clause (1)) divided by the total number of outstanding Common Shares or
shares of such other capital stock immediately after such event
(subject to further adjustment pursuant to the provisions of this
Agreement); (2) the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Purchase
Price thereafter shall equal the result obtained by dividing the
Purchase Price in effect immediately prior to such time by the Exchange
Fraction; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable upon
exercise of such Right; and (3) the number of one one-hundredths of a
Preferred Share or share of such other capital stock issuable upon the
exercise of each Right shall remain unchanged immediately after such
event, but, in the event of a reclassification, the kind of shares
issuable upon the exercise of each Right immediately after such
reclassification shall be adjusted to be the kind of shares of such
other capital stock issued in such reclassification, rather than
Preferred Shares.
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 promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or give such
notice shall not affect the validity of such adjustment or the force or effect
of the requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of such adjustment unless and
until it shall have received such certificate.
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:
(i) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a
transaction the principal purpose of which is to change the state
of incorporation of the Company or which complies with Section
11(o) hereof);
<PAGE>
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) shall
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such consolidation or merger; or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in
one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or one or more of its wholly owned
Subsidiaries in one or more transactions, each of which complies
with Section 11(o) hereof), then, and in each such case, proper
provision shall be made so that:
(A) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully
paid and nonassessable and freely tradeable Common Shares of
the Principal Party (as hereinafter defined), free of any
liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Triggering Event has occurred prior
to the first occurrence of a Section 13 Event, multiplying the
number of such one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event by the Purchase Price in
effect immediately prior to such first occurrence), and (2)
dividing that product (which, following the first occurrence
of a Section 13 Event, shall be referred to as the "Total
Exercise Price" for each Right and for all purposes of this
Agreement) by 50% of the current per share market price
(determined pursuant to Section 11(d) hereof) of the Common
Shares of such Principal Party on the date of consummation of
such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this
Agreement;
(C) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and
(D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
<PAGE>
(b) "Principal Party" shall mean, in the case of any transaction
described in clause (i), (ii) or (iii) of Section 13(a), the Person or
Acquiring Person referred to therein (or such Person's or Acquiring
Person's successor, including, if applicable, the Company, if it is the
surviving corporation), provided, however, that in any such case: (i)
if the Common Shares of such Person is not at such time and has not
been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which is and has been
so registered, "Principal Party" shall refer to such other Person; and
(ii) if 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, and provided, further, that for purposes of
transactions described in clause (iii) hereof, "Principal Party" shall
refer to that Person receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions.
(c) If, for any reason, the Rights cannot be exercised for Common
Shares of such Principal Party as provided in Section 13(a), then each
holder of Rights shall have the right to exchange its Rights for cash
from such Principal Party in an amount equal to the number of Common
Shares that it would otherwise be entitled to purchase times 50% of the
current per share market price, as determined pursuant to Section 11(d)
hereof, of such Common Shares of such Principal Party. If, for any
reason, the foregoing formulation cannot be applied to determine the
cash amount into which the Rights are exchangeable, then the Board of
Directors, based upon the advice of one or more nationally recognized
investment banking firms, and based upon the total value of the
Company, shall determine such amount reasonably and with good faith to
the holders of Rights. Any such determination shall be final and
binding on the Rights Agent.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in clauses (i)
and (ii) of Section 13(a) if: (i) such transaction is consummated with
a Person or Persons who acquired Common Shares pursuant to a Permitted
Offer (or a wholly-owned Subsidiary of any such Person or Persons);
(ii) the price per share of Common Shares offered in such transaction
is not less than the price per share of Common Shares paid to all
holders of Common Shares whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of consideration being offered to
the remaining holders of Common Shares pursuant to such transaction is
the same form as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated
by this Section 13(d), all Rights hereunder shall expire.
(e) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized Common
Shares that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement confirming
that such Principal Party shall, upon consummation of such Section 13
Event, assume this Agreement in accordance with Sections 13(a) and (b)
<PAGE>
hereof, that all rights of first refusal or preemptive rights in
respect of the issuance of Common Shares of such Principal Party upon
exercise of outstanding Rights have been waived, that there are no
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights and that such
transaction shall not result in a default by such Principal Party under
this Agreement, and further providing that, as soon as practicable
after the date of such Section 13 Event, such Principal Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date,
and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the
eligibility requirements for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
In the event that at any time after the occurrence of a Triggering
Event some or all of the Rights shall not have been exercised at the
time of a transaction described in this Section 13, the Rights which
have not theretofore been exercised shall thereafter be exercisable in
the manner described in Section 13(a) (without taking into account any
prior adjustment required by Section 11(a)(ii)).
(f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable, as determined pursuant to the second sentence of
Section 11(d) hereof.
<PAGE>
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares
(other than fractions that are integral multiples of one one-hundredth
of a Preferred Share). In lieu of fractional Preferred Shares that are
not integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of a Common
Share. For purposes of this Section 14(b), the current market value of
a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any
fractional shares upon exercise of a Right.
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 Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed; and
<PAGE>
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated
Common Shares certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
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 reasonable costs and expenses of defending
against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon
any Rights Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth
in Section 20 hereof.
<PAGE>
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 Agent shall
succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring
Person and the determination of "current per share market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one
<PAGE>
of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
change in the exercisability of the Rights or any adjustment in the
terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of a certificate
furnished pursuant to Section 12 describing such change or adjustment);
nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Preferred
Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions. Any
<PAGE>
application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under
this Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not
be less than five (5) Business Days after the date any officer of the
Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of
its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without
first consulting with the Company.
(l) At any time and from time to time after the Distribution Date, upon
the request of the Company, the Rights Agent shall promptly deliver to
the Company a list, as of the most recent practicable date (or as of
such earlier date as may be specified by the Company), of the holders
of record of Rights.
<PAGE>
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or warrants or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued and this
sentence shall be null and void ab initio if, and to the extent that, such
<PAGE>
issuance or this sentence would create a significant risk of or result in
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued or would create a significant risk of or
result in such options' or employee plans' or arrangements' failing to qualify
for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Company may, at its option and with the approval of the Board
of Directors, at any time prior to the Close of Business on the earlier
of (i) the tenth day following the Shares Acquisition Date or such
later date as may be determined by action of a majority of Continuing
Directors then in office and publicly announced by the Company or (ii)
the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being herein referred to as the "Redemption Price") and the
Company may, at its option, pay the Redemption Price either in Common
Shares (based on the current per share market price thereof (as
determined pursuant to Section 11(d) hereof) at the time of redemption)
or cash. Such redemption of the Rights by the Company may be made
effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish; provided,
however, if the Board of Directors of the Company authorizes redemption
of the Rights on or after the time a Person becomes an Acquiring
Person, then there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such
Continuing Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent, and without any further action
and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to
give or any defect in, any such notice shall not effect the validity of
such redemption. Within ten (10) days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or in Section
24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
<PAGE>
Section 24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, the Company may, at its option, by majority vote
of the Board of Directors and a majority vote of the Continuing
Directors, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as
the "Ratio of Exchange"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24
and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by
the Ratio of Exchange. The Company shall give public notice of any such
exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Company shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with Section 24(a),
the Company shall either take such action as may be necessary to
authorize additional Common Shares for issuance upon exchange of the
Rights or alternatively, at the option of a majority of the Board of
Directors, with respect to each Right (i) pay cash in an amount equal
to the Current Value (as hereinafter defined), in lieu of issuing
Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the
Current Value, in lieu of issuing Common Shares in exchange for each
such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors by majority vote of the Board of Directors, or (iii) deliver
<PAGE>
any combination of cash, property, Common Shares and/or other
securities having a value equal to the Current Value in exchange for
each Right. For purposes of this Section 24(c) only, the Current Value
shall mean the product of the current per share market price of Common
Shares (determined pursuant to Section 11(d) on the date of the
occurrence of the event described above in subparagraph (a)) multiplied
by the number of Common Shares for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent
that the Company determines that some action need be taken pursuant to
clauses (i), (ii) or (iii) of this Section 24(c), the Board of
Directors may temporarily suspend the exercisability of the Rights for
a period of up to sixty (60) days following the date on which the event
described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above
provision and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid
to the registered holders of the Rights Certificates with regard to
which such fractional Common Shares would otherwise be issuable, an
amount in cash equal to the same fraction of the current per share
market value of a whole Common Share (as determined pursuant to the
second sentence of Section 11(d) hereof).
(e) The Company may, at its option, by majority vote of the Board of
Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights
of substantially equivalent value, as determined reasonably and with
good faith by the Board of Directors, based upon the advice of one or
more nationally recognized investment banking firms.
(f) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (e) of this Section 24
and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of rights in
exchange therefor as has been determined by the Board of Directors in
accordance with subsection (e) above. The Company shall give public
notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they
appear upon the registry books of the transfer agent for the Common
Shares of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights will be effected.
<PAGE>
Section 25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any
Triggering Event described in Section 11(a)(ii)(A) or 11(a)(ii)(B) or a
Section 13 Event, the Company shall give notice thereof to each holder
of Rights in accordance with Section 26 hereof at least twenty (20)
days prior to occurrence of such Triggering Event or such Section 13
Event.
(b) In case any Triggering Event or Section 13 Event shall occur, then,
in any such case, the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, in accordance with Section
26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of
Rights under Sections 11(a)(ii) and 13 hereof.
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 Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
EXOGEN, INC.
10 Constitution Avenue
P.O. Box 6860
Piscataway, New Jersey 08855
Attn: President
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company may supplement or amend this Agreement in any respect without the
approval of any holders of Rights and the Rights Agent shall, if the Company so
directs, execute such supplement or amendment. From and after the Distribution
Date, the Company and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Rights in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder (which lengthening or shortening,
<PAGE>
following the first occurrence of an event set forth in the proviso to Section
23(a) hereof, shall be effective only if there are Continuing Directors and
shall require the concurrence of a majority of such Continuing Directors) or
(iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
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, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company (and, where specifically provided for
herein, the Continuing Directors) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company (or, where specifically provided for
herein, the Continuing Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board (or, where
specifically provided for herein, by the Continuing Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties and (y) not subject the
Board or the Continuing Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
<PAGE>
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 of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"COMPANY" EXOGEN, INC.
By:/s/ Patrick A. McBrayer
-------------------
Name: Patrick A. McBrayer
Title: Chief Executive Officer and President
"RIGHTS AGENT" REGISTRAR AND TRANSFER COMPANY
By:/s/ William P. Tatler
-----------------
Name: William P. Tatler
Title: Vice President
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF EXOGEN, INC.
Pursuant to Section 151 of the Delaware General Corporation Law
The undersigned, Patrick A. McBrayer and Richard H. Reisner, do hereby
certify:
1. That they are the duly elected and acting Chief Executive Officer
and President, and Vice President, Chief Financial Officer and Secretary,
respectively, of Exogen, Inc., a Delaware corporation (the "Corporation").
2. That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the said
Corporation, the said Board of Directors adopted the following resolution
creating a series of 140,000 shares of Preferred Stock designated as Series A
Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the corporation by the Amended and Restated Certificate of
Incorporation, the Board of Directors does hereby provide for the issue
of a series of Preferred Stock, par value $.0001 per share, of the
Corporation, to be designated "Series A Participating Preferred Stock,"
initially consisting of 140,000 shares and to the extent that the
designations, powers, preferences and relative and other special rights
and the qualifications, limitations and restrictions of the Series A
Participating Preferred Stock are not stated and expressed in the
Amended and Restated Certificate of Incorporation, does hereby fix and
herein state and express such designations, powers, preferences and
relative and other special rights and the qualifications, limitations
and restrictions thereof, as follows (all terms used herein which are
defined in the Amended and Restated Certificate of Incorporation shall
be deemed to have the meanings provided therein):
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Stock," par value $.0001 per
share, and the number of shares constituting such series shall be 140,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior right of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive when, as and if declared by the Board of Directors out of funds legally
<PAGE>
available for the purpose, quarterly dividends payable in cash on the last day
of December, March, June and September in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 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
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock of
the Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Participating Preferred Stock. In the event the Corporation shall at any time
after December 6, 1996 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
<PAGE>
Section 3. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) Except as required by law, holders of Series A
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) The Corporation shall not declare any dividend on, make
any distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock unless
concurrently therewith it shall declare a dividend on the Series A Participating
Preferred Stock as required by Section 2 hereof.
(B) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on, make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with Series A Participating
Preferred Stock, except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
<PAGE>
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(C) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Participating Preferred Stock
shall have received $100 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 shares of Series A Participating
Preferred Stock 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 subparagraph (C) below to reflect
such events as stock splits, stock dividends and recapitalization 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 shares of Series A
Participating Preferred Stock and Common Stock, respectively, holders of Series
A Participating Preferred Stock 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 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
<PAGE>
(B) In the event, however, that there are not sufficient
assets available to permit payment in full to the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the 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 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 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 after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preference or special rights
of the Series A Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Participating Preferred Stock, voting separately
as a class.
<PAGE>
Section 11. Fractional Shares. Series A Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing resolution
and the provisions of Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution."
3. That the authorized number of Preferred Stock of the Corporation is
3,000,000 and that no such Preferred Stock has been issued.
<PAGE>
We further declare under penalty of perjury that the matters set forth
in the foregoing Certificate of Designation are true and correct of our own
knowledge.
Executed at Piscataway, New Jersey on December 6, 1996.
-------------------
Patrick A. McBrayer
Chief Executive Officer and President
---------------------
Richard H. Reisner
Vice President, Chief Financial Officer
and Secretary
<PAGE>
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER DECEMBER 19, 2006 OR EARLIER IF TERMINATED BY THE
COMPANY OR IF THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS
AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $30.00 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF SUCH RIGHTS AGREEMENT.]*
* The portion of the legend in bracket shall be inserted only if applicable and
shall replace the preceding sentence.
RIGHTS CERTIFICATE
EXOGEN, INC.
This certifies that ______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of December 6, 1996 (the "Rights Agreement"),
between Exogen, Inc., a Delaware corporation (the "Company"), and Registrar and
Transfer Company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 p.m., California time, on December 19, 2006 at the office of
the Rights Agent designated for such purpose, or at the office of its successor
as Rights Agent, one one-hundredth of a fully paid non-assessable share of
Series A Participating Preferred Stock, par value $.0001 per share, (the
"Preferred Shares"), of the Company, at a purchase price of $30.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above are the number and Purchase
Price as of December 6, 1996, based on the Preferred Shares as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the
number and kind of Common Shares or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
<PAGE>
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a redemption price of $.01 per Right or (ii) may be exchanged by the Company in
whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
No fractional portion of less than one one-hundredth of a Preferred
Share will be issued upon the exercise of any Right or Rights evidenced hereby
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
<PAGE>
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________, 19__.
ATTEST: EXOGEN, INC.
By:
- - --------------------- ----------------------
Richard H. Reisner Patrick A. McBrayer
Vice President, Chief Financial Officer Chief Executive Officer and
and Secretary President
Countersigned:
REGISTRAR AND TRANSFER COMPANY,
as Rights Agent
By: -------------------
Name:
Title:
<PAGE>
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED____________________hereby sells, assigns and transfers
unto _______________________________________________________________
(Please print name and address of transferee)
- - ----------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, 1996
__________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
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 Person (as such terms are
defined in the Rights Agreement);
(ii) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: _______________, 1996
__________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate)
To:
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Rights Certificate to
purchase the number of one one-hundredths of a Preferred Share issuable upon the
exercise of such Rights and requests that certificates for such number of one
one-hundredths of a Preferred Share issued in the name of:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: , 1996
__________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated:____________,1996
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
EXOGEN, INC.
STOCKHOLDER RIGHTS PLAN
Summary of Rights
Distribution Transfer of Rights; The Board of Directors has declared a
Rights Certificate: dividend of one Right (the "Right") for
each outstanding share of Common Stock,
par value $.0001, of Exogen, Inc. (the
"Company"). Prior to the Distribution
Date referred to below, the Rights will
be evidenced by, and trade with, the
certificates for the Common Stock. After
the Distribution Date, the Company will
mail Rights certificates to the
Company's stockholders and the Rights
will become transferable apart from the
Common Stock.
Distribution Date: Rights will separate from the Common
Stock and become exercisable on the
tenth day (or such later date as may be
determined by a majority of the
Directors not affiliated with the
acquiring person or group (the
"Continuing Directors")) after a person
or group (a) acquires beneficial
ownership of 15% or more of the
Company's Common Stock or (b) announces
a tender or exchange offer, the
consummation of which would result in
ownership by a person or group of 15% or
more of the Company's Common Stock.
Preferred Stock Purchasable After the Distribution Date, each Right
Upon Exercise of Rights: will entitle the holder to purchase, for
$30.00, a fraction of a share of the
Company's Preferred Stock with economic
terms similar to that of one share of
the Company's Common Stock.
<PAGE>
Flip-In: If an acquiror (an "Acquiring Person")
obtains 15% or more of the Company's
Common Stock (other than pursuant to a
tender offer deemed adequate and in the
best interests of the Company and its
stockholders by the Board of Directors
(a "Permitted Offer")), then each Right
(other than Rights owned by an Acquiring
Person or its affiliates) will entitle
the holder thereof to purchase, for the
exercise price, a number of shares of
the Company's Common Stock having a then
current market value of twice the
exercise price.
Flip-Over: If, after the Shares Acquisition Date
(defined below), (a) the Company merges
into another entity, (b) an acquiring
entity merges into the Company or (c)
the Company sells more than 50% of the
Company's assets or earning power, then
each Right (other than Rights owned by
an Acquiring Person or its affiliates)
will entitle the holder thereof to
purchase, for the exercise price, a
number of shares of Common Stock of the
person engaging in the transaction
having a then current market value of
twice the exercise price (unless the
transaction satisfies certain conditions
and is consummated with a person who
acquired shares pursuant to a Permitted
Offer, in which case the Rights will
expire).
Exchange Provision: At any time after an event triggering
the flip-in or flip-over rights and
prior to the acquisition by the
Acquiring Person of 50% or more of the
outstanding Common Stock, the Board of
Directors of the Company may exchange
the Rights (other than Rights owned by
the Acquiring Person or its affiliates),
in whole or in part, at an exchange
ratio of one share of Common Stock per
Right (subject to adjustment).
Redemption of the Rights: Rights will be redeemable at the
Company's option for $.01 per Right at
any time on or prior to the tenth day
(or such later date as may be determined
by a majority of the Continuing
Directors) after public announcement
that a person has acquired beneficial
ownership of 15% or more of the
Company's Common Stock (the "Shares
Acquisition Date").
<PAGE>
Expiration of the Rights: The Rights expire on the earliest of (a)
December 19, 2006, (b) exchange or
redemption of the Rights as described
above, or (c) consummation of a merger
or consolidation resulting in expiration
of the Rights as described above.
Amendment of Terms of Rights: The terms of the Rights and the Rights
Agreement may be amended in any respect
without the consent of the Rights
holders on or prior to the Distribution
Date; thereafter, the terms of the
Rights and the Rights Agreement may be
amended without the consent of the
Rights holders in order to cure any
ambiguities or to make changes which do
not adversely affect the interests of
Rights holders (other than the Acquiring
Person).
Voting Rights: Rights will not have any voting rights.
Anti-Dilution Provisions: Rights will have the benefit of certain
customary anti-dilution provisions.
Taxes: The Rights distribution should not be
taxable for federal income tax purposes.
However, following an event which
renders the Rights exercisable or upon
redemption of the Rights, stockholders
may recognize taxable income.
The foregoing is a summary of certain principal terms of the Stockholder Rights
Plan only and is qualified in its entirety by reference to the detailed terms of
the Rights Agreement dated as of December 6, 1996, between the Company and the
Rights Agent. Further details of the Rights are contained in a letter that will
be mailed to all the Company's stockholders.
