Exhibit 5
FOCAL INC.
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment No. 1 (this "Amendment"), dated as of March 31, 2000, to the
Preferred Shares Rights Agreement dated as of December 17, 1997 (the "Rights
Agreement"), is by and between Focal, Inc. a Delaware corporation (the
"Company") and Norwest Bank Minnesota, N.A., Rights Agent.
RECITALS
WHEREAS, the Company and Genzyme Corporation ("Genzyme") have entered
into a Stock Purchase Agreement dated October 21, 1999 (the "Stock Purchase
Agreement") pursuant to which Genzyme purchased from the Company 810,372 shares
of the Company's Common Stock, $.01 par value per share ("Common Stock").
WHEREAS, pursuant to the Stock Purchase Agreement, the Company has the
right and option, exercisable at the Company's sole and absolute discretion, to
sell to Genzyme additional shares of Common Stock at one or more additional
closings at a price and upon such other terms as are set forth in the Stock
Purchase Agreement (such shares being referred to as the "Option Shares").
WHEREAS, pursuant to the terms of Section 7.1 of the Stock Purchase
Agreement, Genzyme has been granted participation rights with respect to certain
future issuances of capital stock by the Company, if any, in order to maintain
its then ownership percentage of the capital stock of the Company (the
"Participation Rights").
WHEREAS, pursuant to the terms of Section 8 of the Stock Purchase
Agreement, Genzyme has agreed not to acquire beneficial ownership of more than
20% of the voting capital stock of the Company except under certain exceptions
set forth in Section 8.3 of the Stock Purchase Agreement (the "Section 8.3
Exceptions").
WHEREAS, the beneficial ownership by any person of 15% or more of the
capital stock of the Company would result in the acquiring person being deemed
to be an "Acquiring Person" under the Rights Agreement, which would trigger
certain events pursuant to the terms of the Rights Agreement.
WHEREAS, at a meeting of the Board of Directors duly called and held on
October 21, 1999 it was determined that it is in the best interest of the
Company to amend the Rights Agreement so that if Genzyme purchases Option Shares
or additional shares of capital stock pursuant to the Participation Rights or
Section 8.3 Exceptions pursuant to the terms of the Stock Purchase Agreement,
Genzyme does not become an "Acquiring Person" and no "Triggering Event" or
"Distribution Date" (as such terms are defined in the Rights Agreement) will
occur as a result of Genzyme's purchase of shares pursuant to the Stock Purchase
Agreement.
NOW THEREFORE, in consideration of the promises and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AMENDMENT OF SECTION 1. ACTING IN ACCORDANCE WITH SECTION 27 OF THE RIGHTS
AGREEMENT, THE FIRST SUBPARAGRAPH OF SECTION 1, THE DEFINITION OF "ACQUIRING
PERSON," IS HEREBY AMENDED AND RESTATED SO THAT SUCH SUBPARAGRAPH READS IN ITS
ENTIRETY AS FOLLOWS:
"ACQUIRING PERSON" shall mean any person who or which,
together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the Common
Shares then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of
the Company, (iv) any entity holding Common Shares for or
pursuant to the terms of any such plan or (v) Genzyme
Corporation, if any only if, Genzyme Corporation would become
the Beneficial Owners of 15% or more of the Common Shares then
outstanding as a result of the purchase by Genzyme of Common
Shares pursuant to Section 1, 7.1 or 8.3 of that certain Stock
Purchase Agreement dated October 21, 1999 between Genzyme
Corporation and the Company. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person as the result
of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common
Shares of the Company (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 15% or
more of the Common Shares of the Company then outstanding.
Notwithstanding the foregoing, (i) if a majority of the
Continuing Directors then in office determines in good faith
that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently (including, without
limitation, because (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
paragraph (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; and
(ii) if, as of the date hereof, any Person is Beneficial Owner
of 15% or more of the Common Shares outstanding, such Person
shall not be or become an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a),
unless and until such time as such Person shall become the
Beneficial Owner of additional Common Shares (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), unless, upon becoming the Beneficial Owner of such
additional Common Shares, such Person is not then the
Beneficial Owner of 15% or more of the Common Shares then
outstanding."
REAFFIRMATION OF RIGHTS AGREEMENT. EXCEPT AS SPECIFICALLY AMENDED BY THIS
AMENDMENT NO. 1 TO RIGHTS AGREEMENT, THE RIGHTS AGREEMENT SHALL REMAIN IN FULL
FORCE AND EFFECT.
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IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
Rights Agreement to be executed in counterparts as of the date first written
above.
ATTEST: FOCAL, INC.
/s/ W. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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W. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Assistant Secretary Title: President and Chief
Executive Officer
COUNTERSIGNED:
NORWEST BANK OF MINNESOTA, N.A.
As Rights Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President