AMENDMENT NO. 3 TO
SECOND AMENDED AND RESTATED
PREFERRED SHARE RIGHTS AGREEMENT
This Amendment No. 3 (this "Amendment") to Second Amended and Restated
Preferred Shares Rights Agreement (the "Rights Agreement") is made effective as
of December 9, 2003. This Amendment is an amendment to the Rights Agreement
dated August 21, 2000 between Cyberonics, Inc.
, a Delaware
"Company"), and Equiserve Trust Company, N.A. (referred to herein as the "Rights
WHEREAS, pursuant to and in compliance with Section 27 of the Rights
Agreement, the Company and the Rights Agent wish to amend the Rights Agreement
as set forth herein;
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Amendments. From and after the effective date of this
Amendment, the Rights Agreement shall be amended as follows:
(a) The definition of "Exempt Person" in Section 1 of the Rights
Agreement shall be amended and restated to read in its entirety as follows:
"Exempt Person" shall mean (a) the State of Wisconsin
("SWIB"), unless such entity taken together with its Affiliates and
Associates shall become the Beneficial Owner of 20% or more of the
Common Shares outstanding subject to the same exceptions provided in
the second and third sentences of the definition of "Acquiring Person"
except that the reference to "15%" in such sentences shall be "20%" in
the case of SWIB, and (b) Boston Scientific Corporation ("BSX"), unless
such entity taken together with its Affiliates and Associates shall
become the Beneficial Owner of 20% or more of the Common Shares
outstanding subject to the same exceptions provided in the second and
third sentences of the definition of "Acquiring Person" except that the
reference to "15%" in such sentences shall be "20%" in the case of BSX,
or such percentage that is less than 20% as shall be held by BSX as of
the close of business on January 15, 2004.
(b) Section 21 of the Rights Agreement shall be amended by adding the
following sentence after the first sentence:
"In the event the transfer agency relationship in effect between the
Company and the Rights Agent terminates, the Rights Agent will be deemed to
resign automatically on the effective date of such termination; and any required
notice will be sent by the Company."
(c) Section 27 of the Rights Agreement shall be amended and restated to
read in its entirety as follows:
Section 27. Supplements and Amendments. Prior to the occurrence of a
Triggering Event, the Company may supplement or amend this Rights 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 occurrence of a Triggering Event, the Company and the Rights Agent may
from time to time supplement or amend this Rights 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) to change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, this
Rights 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 were 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
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person) and provided further, that for so long as each of SWIB or BSX is an
"Exempt Person" (as defined herein), the definitions of "Exempt Person" and
"Acquiring Person" shall not be amended in any manner which would adversely
affect the application of such terms to SWIB or BSX without the prior consent of
each such person. Upon the delivery of a certificate from an appropriate officer
of the Company that states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
(d) A new Section 35 shall be added to the Rights Agreement and shall
read in its entirety as follows:
Section 35. Force Majeure. Notwithstanding anything to the contrary
contained herein, the Rights Agent shall not be liable for any delays or
failures in performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunction of computer facilities,
or loss of data due to power failures or mechanical difficulties with
information storage or retrieval systems, labor difficulties, war, or civil
(e) Exhibit B (Form of Rights Certificate) and Exhibit C (Summary of
Rights to Purchase Common Shares) to the Rights Agreement shall be amended to
conform to the changes in the Rights Agreement made and effected pursuant to
Section 2. Remainder of Agreement Not Affected. Except as set forth in
Section 1 hereof, the terms and provisions of the Rights Agreement shall remain
in full force and effect and are hereby ratified and confirmed.
Section 3. Authority. Each party represents that such party has full
power and authority to enter into this Amendment, and that this Amendment
constitutes a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
Section 4. Definitions, References.
(a) Unless otherwise specifically defined herein, each term used herein
which is defined in the Rights Agreement shall have the meaning assigned to such
term in the Rights Agreement.
(b) On and after the effective date of this Amendment (i) all
references in the Rights Agreement, including Exhibits B and C to the Rights
Agreement shall be deemed to refer to the Rights Agreement as amended by this
Amendment, and all prior amendments, and (ii) all references to "hereof,"
"hereunder," "herein," "hereby" and other similar references contained in the
Rights Agreement as well as each reference to "this Agreement" and each other
similar reference contained in the Rights Agreement shall refer to the Rights
Agreement, as amended.
Section 5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
By: /s/ Robert P. Cummins
Robert P. Cummins
Chief Executive Officer and President
EQUISERVE TRUST COMPANY, N.A.
By: /s/ Joshua McGinn
Senior Account Manager