<PAGE>
Exhibit 2.1
DATA CRITICAL CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
PREFERRED SHARES RIGHTS AGREEMENT
---------------------------------
Dated as of June 15, 2000
<PAGE>
<TABLE>
<S> <C>
SECTION 1. CERTAIN DEFINITIONS.............................................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.....................................................................6
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.................................................................6
SECTION 4. FORM OF RIGHTS CERTIFICATES.....................................................................7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION...............................................................9
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES........................................9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS.................................................................................10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES............................................11
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES...............................................12
SECTION 10. PREFERRED SHARES RECORD DATE...................................................................13
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS...............................................................................13
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.....................................21
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER........................................................................21
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES........................................................23
SECTION 15. RIGHTS OF ACTION...............................................................................24
SECTION 16. AGREEMENT OF RIGHTS HOLDERS....................................................................24
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.............................................25
SECTION 18. CONCERNING THE RIGHTS AGENT....................................................................25
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT......................................26
SECTION 20. DUTIES OF RIGHTS AGENT.........................................................................27
SECTION 21. CHANGE OF RIGHTS AGENT.........................................................................29
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES............................................................30
SECTION 23. REDEMPTION.....................................................................................30
SECTION 24. EXCHANGE.......................................................................................31
SECTION 25. NOTICE OF CERTAIN EVENTS.......................................................................33
SECTION 26. NOTICES........................................................................................33
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 27. SUPPLEMENTS AND AMENDMENTS.....................................................................33
SECTION 28. SUCCESSORS.....................................................................................34
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC......................................34
SECTION 30. BENEFITS OF THIS AGREEMENT.....................................................................34
SECTION 31. SEVERABILITY...................................................................................34
SECTION 32. GOVERNING LAW..................................................................................35
SECTION 33. COUNTERPARTS...................................................................................35
SECTION 34. DESCRIPTIVE HEADINGS...........................................................................35
</TABLE>
Exhibit A Certificate of Designations
---------
Exhibit B Rights Certificate
---------
Exhibit C Summary of Rights
---------
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<PAGE>
DATA CRITICAL CORPORATION
PREFERRED SHARES RIGHTS AGREEMENT
---------------------------------
This Preferred Shares Rights Agreement (the "Agreement"), dated as of June
15, 2000, is made between Data Critical Corporation, a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
-------
liability company, as Rights Agent (the "Rights Agent").
------------
RECITALS
--------
On June 14, 2000 (the "Rights 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 July 21,
2000 (the "Record Date"), each Right representing the right to purchase one one-
-----------
thousandth of a share of Series A Participating Preferred Stock (as such number
may be adjusted pursuant to the provisions of this Agreement), having the
rights, preferences and privileges set forth in the form of Certificate of
Designations attached to this Agreement 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.
AGREEMENT
---------
The parties 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 or which, together
----------------
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the Common Shares then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. Notwithstanding the foregoing,
(i) no Person shall be deemed to be an Acquiring Person as a
result of an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the percentage of shares beneficially
owned by such Person to 20% or more of the Common Shares of the Company then
outstanding; provided, however, that if a
-------- -------
<PAGE>
Person shall become the Beneficial Owner of 20% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial Owner of such additional Common Shares of the Company
such Person does not beneficially own 20% or more of the Common Shares of the
Company then outstanding;
(ii) no Person shall be deemed to be an Acquiring Person who
acquires beneficial ownership of 20% or more of the Common Shares of the Company
then outstanding by reason of a Permitted Offer; provided, however, that if a
-------- -------
Person shall become the Beneficial Owner of 20% or more of the Common Shares of
the Company then outstanding by reason of a Permitted Offer and shall, after the
completion of such Permitted Offer, become the Beneficial Owner of any
additional Common Shares of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), then such Person shall be deemed to be an Acquiring Person unless such
Person does not beneficially own 20% or more of the Common Shares then
outstanding; and
(iii) if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this Section 1(a) has become such
inadvertently (including, without limitation, because either (A) such Person was
unaware that it beneficially owned a percentage of the Common Shares that would
otherwise cause such Person to be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this Section 1(a) or (B) such Person was aware of
the extent of the Common Shares it beneficially owned but had no actual
knowledge of the consequences of such beneficial ownership under this Agreement)
and without any intention of changing or influencing control of the Company, and
if such Person divested or 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 or to have become an "Acquiring
Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
--------- ---------
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
------------
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
----------------
deemed to "beneficially own" any securities:
----------------
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or
successor law or regulation);
-2-
<PAGE>
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, 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), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
-------- -------
pursuant to this Section l(c)(ii)(A) to be the Beneficial Owner of, or to
beneficially own securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding; provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of, or to
-------
beneficially own, any security under this Section l(c)(ii)(B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section l(c)(ii)(B))
or disposing of any securities of the Company; provided, however, that in no
-------- -------
case shall an officer or director of the Company be deemed (x) the Beneficial
Owner of any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (y) the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of the
Company or any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the voting
of the securities held in the plan.
(d) "Board of Directors" shall mean the Board of Directors of the
------------------
Company then in office.
(e) "Business Day" shall mean any day other than a Saturday, Sunday
------------
or a day on which banking institutions in New York, New York or Seattle,
Washington 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.,
-----------------
Pacific time, on such date; provided, however, that if such date is not a
-------- -------
Business Day it shall mean 5:00 P.M., Pacific time, on the next succeeding
Business Day.
(g) "Common Shares" when used with reference to the Company shall
-------------
mean the shares of Common Stock of the Company, $0.001 par value. "Common
------
Shares" when used
------
-3-
<PAGE>
with reference to any Person other than the Company shall mean the capital stock
(or equity interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Distribution Date" shall mean the earlier of (i) the Close of
-----------------
Business on the tenth day (or such later date as may be determined by action of
a majority of the Board of Directors) 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
the Board of Directors) after the date that notice of 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 20% or more of the shares of Common Stock then
outstanding.
(i) "Equivalent Shares" shall mean the Preferred Shares and any other
-----------------
class or series of capital stock of the Company that is entitled to participate
in dividends and other distributions, including distributions upon the
liquidation, dissolution or winding up of the Company, on a proportional basis
with the Common Shares. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11 of this Agreement, the number of
shares, or fractions of a share, of such class or series of capital stock that
is entitled to the same dividend or distribution as a whole Common Share shall
be deemed to be one share.
(j) "Expiration Date" shall mean the earliest of (i) the Close of
---------------
Business on the Final Expiration Date, (ii) the Redemption Date, (iii) the date
on which the Board of Directors orders the exchange of the Rights as provided in
Section 24 of this Agreement or (iv) the consummation of a transaction
contemplated by Section 13(d) of this Agreement.
(k) "Final Expiration Date" shall mean July 21, 2010.
---------------------
(l) "Permitted Offer" shall mean an offer to purchase, acquire or
---------------
exchange any amount of the then-outstanding Common Shares pursuant to a tender
offer, exchange offer, merger or other transaction which has been (i) determined
by a majority of the Board of Directors to be adequate and otherwise in the best
interests of the Company and its stockholders (taking into account all factors
that the Board of Directors deems relevant, including without limitation prices
that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (ii) approved by the
stockholders of the Company to the extent required under applicable law.
(m) "Person" shall mean any individual, corporation, partnership,
------
limited liability company, joint venture, association, trust, unincorporated
organization or other entity, and shall include any successor (by merger or
otherwise) of such entity.
-4-
<PAGE>
(n) "Post Transferee" shall have the meaning set forth in Section
---------------
4(b) of this Agreement.
(o) "Preferred Shares" shall mean shares of Series A Participating
----------------
Preferred Stock of the Company.
(p) "Prior Transferee" shall have the meaning set forth in Section
----------------
4(b) of this Agreement.
(q) "Purchase Price" shall have the meaning set forth in Section 4(a)
--------------
of this Agreement.
(r) "Record Date" shall have the meaning set forth in the Recitals to
-----------
this Agreement.
(s) "Redemption Date" shall mean the date on which the Board of
---------------
Directors of the Company orders redemption of the Rights as provided in Section
23 of this Agreement.
(t) "Redemption Price" shall have the meaning set forth in Section
----------------
23(a) of this Agreement.
(u) "Right" shall have the meaning set forth in the Recitals to this
-----
Agreement.
(v) "Rights Dividend Declaration Date" shall have the meaning set
--------------------------------
forth in the Recitals to this Agreement.
(w) "Section 13 Event" shall mean any event described in clause (i),
----------------
(ii) or (iii) of Section 13(a) of this Agreement.
(x) "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) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such;
provided that, if such person is properly excluded from the definition of
-------- ----
Acquiring Person under Section 1(a)(i), 1(a)(ii) or 1(a)(iii) of this Agreement,
then no Shares Acquisition Date shall be deemed to have occurred.
(y) "Subsidiary" of any Person shall mean any corporation or other
----------
entity of which an amount of voting securities sufficient to elect a majority of
the directors or Persons having similar authority of such corporation or other
entity is beneficially owned, directly or indirectly, by such Person, or any
corporation or other entity otherwise controlled by such Person.
(z) "Summary of Rights" shall have the meaning set forth in Section
-----------------
3(b) of this Agreement.
(aa) "Total Exercise Price" shall have the meaning set forth in
--------------------
Section 4(a) of this Agreement.
-5-
<PAGE>
(bb) "Trading Day" shall have the meaning set forth in Section 11(d)
-----------
of this Agreement.
(cc) 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 in accordance with the terms and
conditions of this Agreement, 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 upon ten calendar days written notice to the
Rights Agent. In no event shall the Rights Agent have any duty to supervise, or
in any way be liable for, the acts or omissions of such co-rights agent.
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) of this Agreement) 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 shall (i) provide written notice to the Rights Agent of such
Distribution Date, (ii) shall cause its transfer agent or registrar to provide
the Rights Agent with a list of holders of Common Shares, and (iii) 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 to this Agreement (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) of this Agreement,
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) of this Agreement) 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 of the Rights.
-6-
<PAGE>
(b) On the Record Date or as soon as practicable thereafter, the
Company will send (or cause to be sent) a copy of a Summary of Rights in
substantially the form of Exhibit C to this Agreement (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 of any Common Shares, specifies to the contrary, one
Right shall be issued in respect of each Common Share that is issued (i) after
the Record Date and prior to the Distribution Date or the Expiration Date,
whichever is earlier or, (ii) in certain circumstances provided in Section 22 of
this Agreement, after the Distribution Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Preferred Shares
Rights Agreement between Data Critical Corporation and
ChaseMellon Shareholder Services, L.L.C. as the Rights
Agent, dated as of June 15, 2000, as it may be amended from
time to time (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 Data
Critical Corporation. 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. Data Critical Corporation or the Rights
Agent will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
-7-
<PAGE>
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 to this Agreement 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 and which do not affect the rights, duties
or responsibilities of the Rights Agent, 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 of this Agreement, 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), shall show the date of
countersignature by the Rights Agent, and on their face shall entitle the
holders thereof to purchase such number of one-thousandths of a Preferred Share
as shall be set forth therein at the price set forth therein (such exercise
price per one one-thousandth of a Preferred Share being hereinafter referred to
as the "Purchase Price" and the aggregate exercise price of all Preferred Shares
--------------
issuable upon exercise of one Right being hereinafter referred to as the "Total
-----
Exercise Price"), but the number and type of securities purchasable upon the
--------------
exercise of each Right and the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 of this Agreement 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 (a "Post
----
Transferee") or (iii) a transferee of an Acquiring Person (or of any such
----------
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of Directors
of the Company has determined is part of an agreement, arrangement or
understanding that has as a primary purpose or effect avoidance of Section 7(e)
of this Agreement (a "Prior Transferee"), and, provided that the Company shall
----------------
have notified the Rights Agent that this Section 4(b) applies, any Rights
Certificate issued pursuant to Section 6 or Section 11 of this Agreement upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
-8-
<PAGE>
In the event that the Rights become exercisable, the Rights Agent and the
Company will agree upon a procedure for determining which Rights will be so
legended.
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 by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal (if any)
or a facsimile thereof. The Rights Certificates shall be manually countersigned
by an authorized signatory of the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be an officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, is a proper officer of the Company to sign such Rights
Certificate, notwithstanding the fact that, at the date of the execution of this
Rights Agreement, such person was not an authorized officer.
(b) Following the Distribution Date and receipt by the Rights Agent
of all relevant information, 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 of this
Agreement, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a Preferred
Share (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitle 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 properly
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
-9-
<PAGE>
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request. Thereupon
the Rights Agent shall, subject to Sections 7(e), 14 and 24 of this Agreement,
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. The Rights Agent shall have no duty or
obligation under this Section 6 or any similar provision of this Agreement
unless and until it is satisfied that all such taxes and/or governmental charges
have been paid in full.
(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 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.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Subject to Sections 7(e), 23(b) or 24 of this Agreement, the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one-thousandth of a
Preferred Share as to which the Rights are exercised, at or prior to the
Expiration Date.
(b) The Purchase Price for each one-thousandth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be $75.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 of
this Agreement and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the number of one-thousandths of a Preferred
Share (or other securities or property, as the case may be) to be purchased and
an amount equal to any applicable tax or governmental charge required to be paid
by the holder of such Rights Certificate in accordance with Section 9 of this
Agreement 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) of this
Agreement, thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for the Preferred Shares) a certificate or certificates for the number of one-
thousandths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests or
(B) if the Company shall have elected to deposit the total number of one-
thousandths of a Preferred Share issuable
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<PAGE>
upon exercise of the Rights hereunder with a depository agent, requisition from
the depository agent of depository receipts representing such number of one-
thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depository agent) and the Company
hereby directs the depository agent to comply with such request, (ii) when
necessary to comply with this Agreement, requisition from the Company the amount
of cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 of this Agreement, (iii) after receipt of such certificates or
depository receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and (iv) when necessary to comply with this
Agreement, after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Rights Certificate. 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) of this Agreement, 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
necessary to comply with this Agreement.
(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 6 and
Section 14 of this Agreement.
(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 Post Transferee, (iii) 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 notify the Rights Agent when this Section 7(e) applies and shall
use all reasonable efforts to ensure compliance with the provisions of this
Section 7(e) and Section 4(b) of this Agreement, but neither the Company nor the
Rights Agent shall have any liability to any holder of Rights Certificates or to
any other Person as a result of the Company's failure to make any determinations
hereunder with respect to an Acquiring Person or any of such Acquiring Person's
Affiliates, Associates or transferees.
(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 an attempted exercise of a Right
or Rights under this Section 7 unless and until such registered holder has (i)
properly 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 or the Rights Agent shall reasonably request.
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<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 reserve and keep available out of and to the extent of its authorized
and unissued shares of preferred stock not reserved for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Shares and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common
Shares and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares
on a national securities exchange, then so long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on a national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable (but only to
the extent that the Board of Directors determines 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 after the earliest date following the first Triggering Event in
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Sections 11(a)(ii) or 11(a)(iv) of
this Agreement, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities
--------------
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities and (B) the date of expiration of the Rights. The Company may
temporarily suspend, for a period not to exceed ninety (90) days after the date
set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the Rights Agent
in writing, that the exercisability of the Rights has been
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<PAGE>
temporarily suspended, as well as a public announcement and prompt notification
to the Rights Agent at such time as the suspension is no longer in effect. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available, and until a
registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and governmental
charges which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of any Preferred Shares upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax or charge
which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of certificates
or depository receipts for the Preferred Shares in a name other than that of,
the registered holder of the Rights Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or depository receipts
for Preferred Shares upon the exercise of any Rights until any such tax or
charge shall have been paid (any such tax or charge 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 or charge is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name any
----------------------------
certificate for a number of one-thousandths of a Preferred Share is issued upon
the exercise of any Rights shall for all purposes be deemed to have become the
holder of record of Preferred Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the applicable
aggregate Purchase Price with respect to which the Rights have been exercised
(and any applicable taxes and governmental charges) 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.
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
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<PAGE>
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) of this Agreement: (1) each of
the Rights outstanding at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted to that number of Rights (calculated to the nearest one
ten-thousandth (1/10,000) of a Right) equal to the product obtained by
multiplying the outstanding Rights by 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 dividend, subdivision, combination or
reclassification of the Common Shares outstanding immediately following such
dividend, subdivision, combination or reclassification and the denominator of
which shall be the total number of Common Shares outstanding immediately prior
to such time; (2) the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that the Purchase Price thereafter shall
equal the result obtained by dividing the Purchase Price in effect immediately
prior to such time by the Exchange Ratio; provided, however, that in no event
-------- -------
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of Preferred Shares or shares of
such other capital stock issuable upon the exercise of each Right shall remain
unchanged immediately after such event, but, in the event of a reclassification,
the kind of shares issuable upon the exercise of each Right immediately after
such reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares. If
an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) of this Agreement, 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) of this Agreement.
(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) of this Agreement, shall thereafter have the right to
receive for each Right, upon exercise thereof in accordance with the terms of
this Agreement and payment of the then-current Total Exercise Price, in lieu of
a number of one-thousandths of a Preferred Share, that number of Common Shares
of the Company as shall equal the result obtained by (A) multiplying the total
Exercise Price in respect of such Right by the number of one-thousandths of a
Preferred Share for which a Right is then exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to the
first occurrence of a Triggering Event and (B) dividing that product by 50% of
the current per share market price (determined pursuant to Section 11(d) of this
Agreement) of the
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<PAGE>
Common Shares. The number of Common Shares resulting from this adjustment is
hereinafter referred to as the "Adjustment Shares".
-----------------
(iii) The right to buy Common Shares of the Company pursuant to
Section 11(a)(ii) of this Agreement shall not arise as a result of any Person
acquiring beneficial ownership of the Common Shares pursuant to a Permitted
Offer.
(iv) In lieu of issuing Common Shares in accordance with Section
11(a)(ii) of this Agreement, 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 (such excess, the
"Spread") of (1) the value of the Common Shares issuable upon the exercise of a
------
Right (the "Current Value") over (2) the Purchase Price 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
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 Spread,
where such aggregate value has been determined by the Board of Directors based
upon the advice of a nationally recognized investment banking firm selected by
the Board of Directors; provided, however, if the Company shall not have made
-------- -------
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Triggering Event
and (y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the "Section
-------
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon
----------------------
the surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available), except to the extent
that the Company has not obtained any necessary stockholder or regulatory
approval for such issuance, and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors
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) of this Agreement, that such action shall
apply uniformly to all outstanding Rights and (y) may suspend the exercisability
of the Rights until the
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<PAGE>
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 (with prompt
notice thereof to the Rights Agent). 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) of this Agreement) of the Common Shares on
the Section 11(a)(ii) Trigger Date and the value of any "Common Stock
Equivalent" shall be deemed to have the same value as the Common Shares on such
date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Common Shares or of any class or series of Equivalent Shares
entitling such holders (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Common Shares or
Equivalent Shares or securities convertible into Common Shares or Equivalent
Shares at a price per share (or having a conversion price per share, if a
security convertible into Common Shares or Equivalent Shares) less than the then
current per share market price of the Common Shares or Equivalent Shares (as
defined in Section 11(d)) on such record date, then, in each such case, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of
Common Shares or Equivalent Shares, as the case may be, which the aggregate
offering price of the total number of Common Shares or Equivalent Shares, as the
case may be, so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of Common Shares
and Equivalent Shares (if any) outstanding on such record date, plus the number
of additional Common Shares or Equivalent Shares, as the case may be, to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors, 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
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<PAGE>
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) of this Agreement) of a Common Share or an Equivalent Share on
such record date, less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Common Share or Equivalent Share, as the case may be, and the
denominator of which shall be such current market price (as determined pursuant
to Section 11(d) of this Agreement) of a Common Share or Equivalent Share on
such record date. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iv) of this Agreement, the "current
-------
per share market price" of the of any security (a "Security" for purposes of
---------------------- --------
this Section 11(d)) on any date shall be deemed to be the lesser of (x) the
average of the daily closing prices per share of the Security for the thirty
(30) consecutive Trading Days immediately prior to, but not including, such date
or (y) the average of the daily closing prices per share of the Security for the
30 consecutive Trading Days immediately following, but not including, 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 a dividend or distribution on such Security payable
in the Security or securities convertible into such Securities (other than the
Rights), or any subdivision, combination or reclassification of such Security,
and prior to the expiration of 20 Trading Days after the ex-dividend date for
such dividend or distribution, then, and in each such case, the current market
price shall be appropriately adjusted to reflect the current market price per
share of the Security's equivalent. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange, if any, on
which the Security is then listed or admitted to trading or, if the Security not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by The NASDAQ Stock Market
("NASDAQ") or such other system then in use. The term "Trading Day" shall mean
-------- -----------
a day on which the principal national securities exchange or NASDAQ on which the
Security is listed or traded is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange or NASDAQ, 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, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
-------- -------
that any adjustments which by reason of
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<PAGE>
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a Common Share or other share or one hundred-thousandth of a Preferred Share, as
the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which requires such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Sections 11(a)
or 13(a) of this Agreement, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right and if required, the Purchase Price thereof, shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Sections 11(a), (b), (c), (e), (h), (i), (j), (k), (1) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b), each Right outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Preferred Shares (calculated to
the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x)
the number of Preferred Shares covered by a Right immediately prior to this
adjustment, by (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. If the Company so
elects, each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election (and shall give simultaneous written notice to the Rights Agent 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
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<PAGE>
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 of this Agreement, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandth of a Preferred Share and the number of
one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par or stated value, if any, of the number of one-
thousandths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue as
fully paid and nonassessable shares such number of one-thousandths of a
Preferred Share at such adjusted Purchase Price.
(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 (and shall promptly notify the
Rights Agent of any such election) until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
-------- -------
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
prior to the Distribution Date, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred or Common Shares, (ii) issuance wholly for cash of
any Preferred or Common Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred or Common Shares or securities which by
their terms are convertible into or exchangeable for
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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 consent to the occurrence of any
Triggering Event or Section 13 Event, if (i) at the time of 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 Triggering Event or Section 13 Event, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
---------------
Section 13(b) of this Agreement 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 of this
Agreement, 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) of this Agreement: (1) each of the
Rights outstanding at the time of the record date for such dividend or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted to that number of Rights (calculated to the nearest one
ten-thousandth (1/10,000) of a Right) equal to the product obtained by
multiplying the outstanding Rights by a fraction (the "Exchange Fraction"), the
-----------------
numerator of which shall be the total number of Preferred Shares or shares of
capital stock issued in such reclassification of the Preferred Shares
outstanding immediately following such time and the denominator of which shall
be the total number of Preferred Shares outstanding immediately prior to such
time, and the Company shall issue such Rights accordingly; (2) the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
adjusted so that the Purchase Price thereafter shall equal the result obtained
by dividing the Purchase Price in effect immediately prior to such time by the
Exchange Fraction; provided, however, that in no event shall the consideration
-------- -------
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of such
Right; and (3) the number of one-thousandths of a Preferred Share or share of
such other capital stock issuable upon the exercise of each Right shall remain
unchanged immediately after such event, but, in the event of a reclassification,
the kind of shares issuable upon the exercise of each Right immediately after
such reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares.
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<PAGE>
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13 of this
Agreement, the Company shall promptly (a) prepare a certificate setting forth
such adjustment and a brief, reasonably detailed, statement of the facts,
computations and methodology 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 of this Agreement. 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: (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company) and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger; (y) any Person (other than a Subsidiary of the Company)
shall consolidate with, or merger into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property; or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in a single transaction or a series of related transactions, assets or earning
power aggregating 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 any Subsidiary of the Company), then, and in each such case,
proper provision shall be made so that:
(i) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at the
then current purchase price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid and nonassessable Common
Shares of the Principal Party (as hereinafter defined), free of any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one-thousandths of a Preferred Share for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Triggering Event has occurred prior to the first occurrence of a Section 13
Event, multiplying the number of such one-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to the first occurrence of a
Triggering Event by the Purchase Price in effect immediately prior to such first
occurrence) and (2) dividing that product (which, following the first occurrence
of a Section 13 Event, shall be referred to as the "Total Exercise Price" for
--------------------
each Right and for all purposes of this Agreement) by 50% of the current per
share market price (determined pursuant to Section 11(d) of this Agreement) of
the Common Shares of such Principal Party on the date of consummation of such
Section 13 Event;
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<PAGE>
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
-------
such Principal Party, it being specifically intended that the provisions of
Section 11 of this Agreement shall apply only to such Principal Party following
the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions of this Agreement shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean, in the case of any transaction
---------------
described in clause (x), (y) or (z) of Section 13(a), the Person referred to
therein or such Person's successor, including, if applicable, the Company, if it
is the surviving corporation), provided, however, that in any such case, (i) if
-------- -------
such Person is a direct or indirect Subsidiary of another Person, "Principal
---------
Party" shall refer to such other Person and (ii) in case such Person is a
-----
Subsidiary, directly or indirectly, of more than one Person, "Principal Party"
---------------
shall refer to whichever of such Persons is the issuer of the Common Shares
having the greatest aggregate value, and provided, further, that for purposes of
-------- -------
transactions described in clause (iii) of this Section 13(b), "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) of this Agreement, 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 (x) and (y) 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
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<PAGE>
form of consideration paid pursuant to such Permitted Offer. Upon consummation
of any such transaction described in this Section 13(d), all Rights under this
Agreement 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) of this Agreement, 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 that evidence fractional Rights. In lieu of such
fractional Rights,
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<PAGE>
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) of this
Agreement.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions that are
integral multiples of one one-thousandth of a Preferred Share). In lieu of
fractional Preferred Shares that are not integral multiples of one one-
thousandth of a Preferred Share, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of a
Common Share. For purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d) of this Agreement) 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.
(d) The Rights Agent shall have no duty or obligation under this Section 14
unless and until it has received specific instructions (and sufficient cash, if
required) from the Company with respect to its duties and obligations under such
Section.
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 of this Agreement, 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 may not have an adequate remedy at law for any breach of this Agreement
and will be entitled to seek 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:
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<PAGE>
(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 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, along with such other
documentation as the Rights Agent may reasonably request; and
(c) subject to Sections 6(a) and 7(f) of this Agreement, 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.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or other ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or by any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligations; provided, however, that the Company shall use its best efforts to
-------- -------
have any such order decree, judgment or ruling lifted.
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 of this Agreement), 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 of this Agreement.
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 preparation, delivery, administration,
execution and amendment of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent
-25-
<PAGE>
for, and to hold it harmless against, any loss, damage, judgment, fine, penalty,
claim, demand, settlement cost, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
any action taken, suffered or omitted by the Rights Agent (as finally determined
by a court of competent jurisdiction) in connection with the acceptance and
administration of this Agreement, including, without limitation, the costs and
expenses of defending against any claim of liability in the premises. The
indemnity provided herein shall survive the termination of this Agreement and
the termination and expiration of the Rights. The costs and expenses incurred in
enforcing this indemnification shall be paid by the Company. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, punitive, indirect, incidental or consequential loss or
damage of any kind whatsoever (including, but not limited to, lost profits),
even if the Rights Agent has been advised of the possibility of such loss or
damage.
(b) The Rights Agent shall be authorized to rely on, shall be
protected and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, the acceptance and administration
of this Agreement in reliance upon any Rights Certificate or certificate for the
Common Shares or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 of this Agreement. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained. The Rights Agent shall not be deemed to have knowledge, a duty, or
notice unless the Company has given it actual notice.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement; provided, however, that such corporation would be
-------- -------
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 of this Agreement. 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
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<PAGE>
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, and only the duties and obligations, expressly imposed by this
Agreement (and no implied duties or obligations) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion or advice of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for or in respect of, any action taken,
suffered or omitted by it in good faith and in accordance with such opinion or
advice.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current per share market price") be proved or established by
------------------------------
the Company prior to taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the 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 and protection to the
Rights Agent, and the Rights Agent shall incur no liability for or in respect
of, any action taken, suffered or omitted 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 gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the 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 have any liability for, nor be under
any responsibility in respect of the validity of this Agreement or the execution
and delivery of this Agreement (except the due execution of this Agreement 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
-27-
<PAGE>
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 the
advice or 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 such advice or instructions
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted by it in good faith in accordance with the advice or instructions of
any such officer or for any delay in acting while waiting for such advice or
instructions (the Rights Agent may conclusively rely on the most recent advice
or instructions given by any such officer). Any application by the Rights Agent
for written advice or instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered 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 or suffered 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 or suffering
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, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, 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 Person.
(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 or any other Person
-28-
<PAGE>
resulting from any such act, default, neglect or misconduct, absent any gross
negligence or willful misconduct 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
it reasonably believes that repayment of such funds or adequate indemnification
against such risk or liability is not assured.
(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 properly 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.
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 either (a) be
a Person organized and doing business under the laws of the United States or of
any state of the United States, in good standing, subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (b) an affiliate of such a Person. 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.
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<PAGE>
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
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, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
-------- -------
Certificate shall be issued and this sentence shall be null and void ab initio
---------
if, and to the extent that, such issuance or this sentence would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options' or employee plans' or
arrangements' failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
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 the Board of Directors and publicly
announced by the Company or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $0.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement (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)
of this Agreement) at the time of redemption) or cash. Such redemption 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.
(b) Immediately upon the action of the Board of Directors 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, such notice shall not affect 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 written
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
-30-
<PAGE>
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 of this Agreement, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
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, 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 null and void pursuant to the provisions of
Section 7(e) of this Agreement) 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 of this Agreement (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
promptly give written notice to the Rights Agent and 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 null and void
pursuant to the provisions of Section 7(e) of this Agreement) 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
-31-
<PAGE>
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
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 promptly give written notice to the Rights Agent and shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Common Shares. In
lieu of such fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current per share market value of a whole Common Share (as determined
pursuant to the second sentence of Section 11(d) of this Agreement).
(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 promptly give written notice to the Rights Agent and 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.
-32-
<PAGE>
SECTION 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose to effect or permit to occur any
Section 13 Event, the Company shall promptly give written notice to the Rights
Agent and shall give notice thereof to each holder of Rights in accordance with
Section 26 of this Agreement at least twenty (20) days prior to occurrence of
such Section 13 Event.
(b) In case any Triggering Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to the Rights Agent and to each holder of a Rights Certificate, in accordance
with Section 26 of this Agreement, 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 of this Agreement.
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:
Data Critical Corporation
19820 North Creek Parkway, Suite 100
Bothell, Washington 98011
Attention: Chief Financial Officer
Subject to the provisions of Section 21 of this Agreement, 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:
ChaseMellon Shareholder Services, L.L.C.
520 Pike Street, Suite 1220
Seattle, Washington 98101
Attention: Relationship Manager
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 or (iv) change or supplement the
provisions hereunder in any
-33-
<PAGE>
manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the Rights Agent or 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 and, provided such
supplement or amendment does not change or increase the Rights Agent's duties,
liabilities or obligations hereunder, 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 shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors, or the Company, 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 of 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 Persons and
(y) not subject the Board of Directors to any liability to the holders of the
Rights. The Rights Agent is entitled to assume that the Board of Directors
acted in good faith.
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).
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
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<PAGE>
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 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 of this Agreement shall be reinstated, and the Company shall promptly
notify the Rights Agent of such reinstatement, 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; provided, however, that all
-------- -------
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the state of
New York applicable to contracts made and to be performed entirely within the
state of New York.
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 of this
Agreement.
The parties have caused this Agreement to be duly executed as of the date
first written above.
DATA CRITICAL CORPORATION
By: /s/ Michael E. Singer
-----------------------------------
Name: Michael E. Singer
---------------------------------
Title: Chief Financial Officer
--------------------------------
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Joseph S. Campbell
-----------------------------------
Name: Joseph S. Campbell
---------------------------------
Title: Assistant Vice President
--------------------------------
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<PAGE>
Exhibit A
---------
CERTIFICATE OF DESIGNATIONS
OF RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
DATA CRITICAL CORPORATION
Pursuant to Section 151(g) and Section 103 of the General Corporation Law
of the State of Delaware, I, Jeffrey S. Brown, the President and Chief Executive
Officer of Data Critical Corporation (the "Corporation"), a corporation
-----------
organized and existing under the General Corporation Law of the State of
Delaware hereby certify:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the Corporation, the Board
of Directors, on June 14, 2000 adopted the following resolution creating a
series of shares of Preferred Stock designated as Series A Participating
Preferred Stock:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority granted to
and vested in this Board of Directors in accordance with the Company's
Certificate of Incorporation, this Board of Directors hereby creates a series of
preferred stock, par value $0.001 per share, called the "Series A Participating
Preferred Stock," and hereby fixes the relative rights, preferences and
limitations thereof (in addition to the rights and preferences set forth in the
Certificate of Incorporation of the Company that are applicable to the preferred
stock of the Company generally) as set forth in the Certificate of Designation
(the "Certificate of Designations") as set forth below:
1. Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Participating Preferred Stock", par value $0.001 per share, and the
number of shares constituting such series shall be fifty thousand (50,000).
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
<PAGE>
Preferred Stock shall be entitled to receive when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of each fiscal quarter in each year,
or such other date as the Company's Board of Directors shall approve (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, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock of the Corporation (the "Common Stock") since the
------------
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Participating Preferred Stock. In the event the
Corporation shall at any time after July 21, 2000 (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>
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 1,000 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) Except as required by law, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
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
<PAGE>
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of Series A
Participating Preferred Stock, or any shares of stock ranking on a parity with
the Series A Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(C) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Participating Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Participating Preferred Stock
shall have received an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
plus an amount equal to the greater of (1) $1,000 per share, provided that in
the event the Corporation does not have sufficient assets, after payment of its
liabilities and distribution to holders of Preferred Stock ranking prior to the
Series A Participating Preferred Stock, available to permit payment in full of
the $1,000 per share amount, the amount required to be paid under this Section
6(A)(1) shall, subject to Section 6(B) hereof, equal the value of the amount of
available assets divided by the number of outstanding shares of Series A
Participating Preferred Stock or (2) subject to the provisions for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount to be
distributed to the holders of Common Stock (the greater of (1) or (2), the
"Series A Liquidation
<PAGE>
Preference"). In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Participating Preferred Stock
were entitled immediately prior to such event under clause (2) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock that were outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Participating Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of common Stock that were outstanding immediately prior to
such event.
8. No Redemption. The shares of Series A Participating Preferred Stock
-------------
shall not be redeemable.
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.
10. Amendment. The Certificate of Incorporation of the Corporation shall
---------
not be further amended in any manner which would materially alter or change the
powers, preference or special rights of the Series A Participating Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of a majority or more of the outstanding shares of Series A Participating
Preferred Stock, voting separately as a class.
<PAGE>
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."
Executed this ___ day of _______________, 2000.
______________________________________
Jeffrey S. Brown
President and Chief Executive Officer
<PAGE>
EXHIBIT B
---------
FORM OF RIGHTS CERTIFICATE
--------------------------
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER JULY 21, 2010, OR EARLIER IF TERMINATED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON 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.
RIGHTS CERTIFICATE
------------------
This certifies that ________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Preferred Shares Rights Agreement, dated as of June 15, 2000 (the "Rights
------
Agreement"), between Data Critical Corporation, a Delaware corporation (the
---------
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey Limited
--------
Liability 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., Pacific time, on July 21, 2010 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth (1/1000) of a fully paid non-assessable share
of Series A Participating Preferred Stock (the "Preferred Shares"), of the
----------------
Company, at a purchase price of $75.00 per one-thousandth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Rights
--------------
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of one-thousandths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, are the number and Purchase Price as of July
21, 2000, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number and kind of
Preferred Shares or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, covenants and
restrictions 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 office of the Rights Agent listed below.
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate (i) may be redeemed by the Company, at its option, at a
redemption price of $0.01 per Right or (ii) may be exchanged by the Company in
whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may
(subject to certain conditions as set forth in the Rights Agreement) 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 (subject to certain conditions as
set forth in the Rights Agreement), the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
No fractional portion less than integral multiples of one one-thousandth of
a Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
-2-
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _____________, 2000.
ATTEST: DATA CRITICAL CORPORATION
By:
______________________________________ ___________________________________
Michael E. Singer, Assistant Secretary Jeffrey S. Brown, President
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
_________________________________
as Rights Agent
By:______________________________
Authorized Signatory
Date of countersignature:________
Rights Agreement on file at:
ChaseMellon Shareholder Services, L.L.C.
520 Pike Street, Suite 1220
Seattle, Washington 98101
-3-
<PAGE>
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ______________________________________ hereby sells, assigns
and transfers unto ____________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
Attorney, to transfer the Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________________, _____
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person,
or an Affiliate or Associate of any such Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated:______________, ______
___________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate)
To: ______________________________
The undersigned hereby irrevocably elects to exercise ___________________
Rights represented by this Rights Certificate to purchase the number of one-
thousandths of a Preferred Share issuable upon the exercise of such Rights and
requests that certificates for such number of one-thousandths of a Preferred
Share be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance shall be registered in the
name of and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:_____________, ______
____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
<PAGE>
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:_________________, _____
____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
---------
DATA CRITICAL CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Rights
Distribution and The Board of Directors has declared a dividend of one
Transfer of Rights; Right for each share of Common Stock of Data Critical
Rights Certificate: Corporation (the "Company") outstanding. Prior to the
------------------ -------
Distribution Date referred to below, the Rights will be
evidenced by and trade with the certificates for the
Common Stock. After the Distribution Date, the Company
will mail Rights certificates to the Company's
stockholders and the Rights will become transferable
apart from the Common Stock .
Distribution Date: Rights will separate from the Common Stock and become
----------------- exercisable following the tenth day (or such later date
as may be determined by a majority of the Company's Board
of Directors) after a person or group (a) acquires
beneficial ownership of 20% 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 20% or more of the Company's Common
Stock (the "Distribution Date").
-----------------
Preferred Stock After the Distribution Date, each Right will entitle the
Purchasable Upon holder to purchase, for $75.00, a fraction of a share
Exercise of Rights: (1/1000th) of the Company's Preferred Stock with
------------------ economic terms similar to that of one share of the
Company's Common Stock.
Flip-In Rights: If an acquiror (an "Acquiring Person") obtains 20% or
-------------- ----------------
more of the Company's Common Stock (other than pursuant
to a tender offer deemed fair by the Board of Directors
(a "Permitted Offer"), then each Right (other than those
---------------
Rights owned by an Acquiring Person or its affiliates)
will entitle the holder thereof to purchase, for the then
current exercise price, a number of shares of the
Company's Common Stock having a then current market value
of twice the then current exercise price.
Flip-Over Rights: 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 those Rights
owned by an Acquiring Person or its affiliates) will
entitle the holder thereof to purchase, for the then
current 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 then current
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).
<PAGE>
Exchange Provision: At any time after an Acquiring Person obtains 20% or more
------------------ of the Company's Common Stock (other than pursuant to a
Permitted Offer) 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 those Rights owned by the Acquiring
Person or its affiliates), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to
anti-dilution adjustment) or any other property, cash or
debt of equivalent value.
Redemption of Rights will be redeemable at the Company's option for
the Rights: $0.01 per Right at any time on or prior to the tenth day
---------- (or such later date as may be determined by a majority of
the Board of Directors) after public announcement that a
person has acquired beneficial ownership of 20% or more of
the Company's Common Stock (the "Shares Acquisition
------------------
Date").
----
Expiration of The Rights expire on the earliest of (a) July 21, 2010,
the Rights: (b) the exchange or redemption of the Rights as described
---------- above, or (c) the consummation of a merger or
consolidation or sale of assets resulting in expiration of
the Rights as described above.
Amendment of Terms The terms of the Rights and the Rights Agreement may be
of Rights: 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 only
be amended with the consent of the holders holding a
majority of the Rights, other than any amendments to cure
any ambiguities or to make changes which do not adversely
affect the interests of Rights holders (other than the
Acquiring Person) which changes may be effected without
consent by the Company or the Rights Agent.
Voting Rights: Rights will not have any voting rights.
-------------
Anti-Dilution Rights will have the benefit of certain customary
Provisions: 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 June 15, 2000, between the Company and the
Rights Agent.
