RIGHTS AGREEMENT
by and between
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
Dated as of ______________
TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . 6
Section 3. Issuance of Right Certificates. . . . . . . . . . . . . . . 6
Section 4. Form of Right Certificates. . . . . . . . . . . . . . . . . 8
Section 5. Countersignature and Registration . . . . . . . . . . . . . 9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. . . . . . . . . . . . . . . . . . . . . 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8. Cancellation and Destruction of Right Certificates. . . . . 12
Section 9. Reservation and Availability of Shares; Registration. . . . 12
Section 10. Record Date . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Certification 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 . . . . . . . . . . 24
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . 25
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . 26
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . 26
Section 19. Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . 27
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Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . 29
Section 22. Issuance of New Right Certificates. . . . . . . . . . . . . 30
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 24. Notice of Proposed Actions. . . . . . . . . . . . . . . . . 31
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 26. Supplements and Amendments. . . . . . . . . . . . . . . . . 32
Section 27. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 29. Determination and Actions Taken by the Board of
Directors . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 30. Benefits of this Agreement. . . . . . . . . . . . . . . . . 34
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 34
Section 32. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 33. Section Headings. . . . . . . . . . . . . . . . . . . . . . 34
Section 34. Severability. . . . . . . . . . . . . . . . . . . . . . . . 34
Exhibit A Form of Right Certificate
Exhibit B Form of Summary of Rights
Exhibit C Certificate re Junior Participating Preferred Stock
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of ________________, between TALBERT
MEDICAL MANAGEMENT HOLDINGS CORPORATION, a Delaware corporation (the
"Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
corporation, as Rights Agent.
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has authorized and
declared the distribution of one right for (i) each share of Common Stock of the
Company ("Common Stock") outstanding at the Close of Business (as hereinafter
defined) on ________________ (the "Rights Record Date"), each right representing
the right to purchase one Unit consisting, initially, of one one-hundredth of a
share of Junior Participating Preferred Stock, and (ii) each additional share of
Common Stock which shall become outstanding between the Rights Record Date and
the earliest of the Distribution Date, the Expiration Date (as such terms are
hereinafter defined) and the date, if any, on which such rights may be redeemed,
all upon the terms and subject to the conditions hereinafter set forth (each
such right being hereinafter referred to as a "Right");
NOW, THEREFORE, the parties agree as follows:
Section 1. CERTAIN DEFINITIONS.
(a) For purposes of this Agreement, the following terms have the
meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (within the meaning of Section 1(b)) of a Substantial
Block of Voting Stock, but shall not include (i) an Exempt Person or
(ii) any Person who or which acquires a Substantial Block of Voting Stock
in connection with a transaction or series of transactions approved prior
to such transaction or transactions by the Board of Directors of the
Company; provided that no person shall become an Acquiring Person solely as
a result of a reduction in the number of shares of Voting Stock
outstanding, unless and until such Person shall thereafter become the
Beneficial Owner of additional shares constituting 1% or more of the
general voting power of the Company.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect as of the date hereof.
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"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Los
Angeles time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., Los Angeles time, on the next
succeeding Business Day.
"COMMON STOCK" shall have the meaning assigned to it in the
preamble; and "COMMON STOCK" when used with reference to Persons other than
the Company shall mean: (i) in the case of Persons organized in corporate
form, the capital stock or equity security with the greatest voting power
of such Person or, if such Person is a Subsidiary of another Person, of the
Person or Persons which ultimately control such first-mentioned Person; and
(ii) in the case of Persons not organized in corporate form, the units of
beneficial interest which (A) represent the right to participate generally
in the profits and losses of such Person (including without limitation any
flow-through tax benefits resulting from an ownership interest in such
Person) and (B) are entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall have the power to
remove the general partner or partners.
"CONTINUING DIRECTOR" shall mean any member of the Board of
Directors of the Company (while such Person is a member of the Board) who
(i) is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and (ii) either (A) was a member of the Board of
Directors prior to the time any Person became an Acquiring Person, or
(B) became a member of the Board of Directors subsequent to the time any
Person became an Acquiring Person, if such Person's nomination for
election, or re-election, to the Board was recommended, or approved, by a
majority of the Continuing Directors then in office.
"DISTRIBUTION DATE" shall have the meaning assigned to it in
Section 3(a).
"EFFECTIVE TIME" shall mean the effective time of the FHP Merger.
"EQUIVALENT STOCK" shall have the meaning assigned to it in
Section 7(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXEMPT PERSON" shall mean (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan or employee stock plan of
the
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Company or of any Subsidiary of the Company or any trust or other
entity organized, established or holding shares of Common Stock by, for or
pursuant to, the terms of any such plan, (iv) any Person, including FHP,
who, solely as a result of the exercise of Subscription Rights distributed
to such Person or, in the case of FHP, solely as a result of the transfer
by the Company to FHP of Unsubscribed Shares, Beneficially Owns a
percentage of the outstanding Voting Stock (the "Grandfathered Percentage")
equal to or in excess of the Trigger Percentage as of the Subscription
Rights Expiration Date, PROVIDED, HOWEVER, that (A) such Person's
Grandfathered Percentage shall not exceed its FHP Ownership Percentage, or
in the case of FHP, shall not exceed the Unsubscribed Share Percentage, (B)
such Person shall not acquire any additional Voting Stock of the Company
after the Subscription Rights Expiration Date, (C) such Person's
Grandfathered Percentage shall be reduced to the extent such Person
transfers any Voting Stock, and (D) any transferee of such Person's Voting
Stock (other than an Exempt Person within the meaning of clauses (i)-(iii)
above or (v) below) who after such transfer would Beneficially Own Voting
Stock equal to or in excess of the Trigger Percentage shall not be an
Exempt Person; and (v) any transferee of Voting Stock held by FHP (an "FHP
Transferee") who after such transfer would Beneficially Own Voting Stock
equal to or in excess of the Trigger Percentage, but only to the extent of
such FHP Transferee's Beneficial Ownership as a result of such Transfer
(the "FHP Transferee Percentage"), PROVIDED, HOWEVER, that (A) FHP's
Unsubscribed Share Percentage shall be in excess of 20%, (B) such FHP
Transferee shall not acquire any additional Voting Stock after such
transfer, (C) such FHP Transferee's FHP Transferee Percentage shall be
reduced to the extent such FHP Transferee transfers any Voting Stock, and
(D) any transferee of such FHP Transferee's Voting Stock (other than an
Exempt Person within the meaning of clauses (i)-(iii) above) who after such
transfer would Beneficially Own Voting Stock equal to or in excess of the
Trigger Percentage shall not be an Exempt Person.
"EXPIRATION DATE" shall have the meaning assigned to it in
Section 7(a).
"FHP" shall mean FHP International Corporation, a Delaware
corporation.
"FHP MERGER" shall mean the merger of FHP and PacifiCare Health
Systems, Inc., a Delaware corporation.
"FHP OWNERSHIP PERCENTAGE" shall be calculated by dividing the
number of shares of FHP Common Stock (on an as-if-converted basis)
Beneficially Owned by such Person as of the Effective Time by the number of
shares of FHP Common Stock (on an as-if-converted basis) outstanding as of
the Effective Time.
"OFFER DATE" shall have the meaning assigned to it in Section
3(a).
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"PERSON" shall mean any individual, firm, corporation,
partnership, trust or other entity and shall include any successor by
merger (or otherwise) of any of the foregoing.
"PRINCIPAL PARTY" shall have the meaning assigned to it in
Section 13(b).
"PURCHASE PRICE" shall mean the price payable for one Unit upon
exercise of a Right.
"QUALIFIED OFFER" shall mean a tender or exchange offer for all
outstanding Common Stock at a price and on terms determined to be adequate
and otherwise in the best interests of the Company and its shareholders
(other than the Person or an Affiliate or Associate thereof on whose behalf
the offer is made) by at least a majority of the Continuing Directors who
are not representatives of or affiliated with the Person making such offer
or any Affiliate or Associate of such Person.
"REDEMPTION PRICE" shall have the meaning assigned to it in
Section 23(a).
"RIGHT" shall have the meaning assigned to it in the preamble.
"RIGHTS RECORD DATE" shall have the meaning assigned to it in the
preamble.
"SUBSCRIPTION RIGHTS" shall mean the subscription rights to
purchase the Company's common stock distributed to FHP's stockholders in
connection with the FHP Merger.
"SUBSCRIPTION RIGHTS EXPIRATION DATE" shall mean the expiration
date of the Subscription Rights.
"SUBJECT SHARES" shall mean the class or series of shares then
issuable on exercise of the Rights.
"STOCK ACQUISITION DATE" shall mean the date of the first public
announcement by the Company or an Acquiring Person (which, for purposes of
this definition, shall include, without limitation, a report filed pursuant
to Section 13(d) under the Exchange Act) that an Acquiring Person has
become such.
"SUBSIDIARY" shall mean, with respect to any Person, a
corporation or other entity the securities or other ownership interests of
which having ordinary voting power sufficient to elect a majority of the
board of directors or other
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persons performing similar functions are at the time directly or indirectly
owned by such Person and any Affiliate of such Person.
"SUBSTANTIAL BLOCK" shall mean a number of shares of Voting Stock
equal to or in excess of the Trigger Percentage.
"TRADING DAY" shall have the meaning assigned to it in Section
11(d).
"TRIGGER PERCENTAGE" shall mean, for a period of 90 days from the
Subscription Rights Expiration Date, 8% of the Company's outstanding Voting
Stock, and following such 90-day period shall mean 15% of the Company's
outstanding Voting Stock.
"UNIT" shall mean the shares or other securities issuable upon
exercise of one Right, initially one one-hundredth of a share of Junior
Participating Preferred Stock of the Company having the rights and
preferences set forth in Exhibit C, before any adjustment pursuant to
Section 11(a)(ii) or Section 13.
"UNSUBSCRIBED SHARES" shall mean shares of the Company's common
stock unsubscribed in the distribution to FHP's stockholders of the
Subscription Rights.
"UNSUBSCRIBED SHARE PERCENTAGE" shall mean the percentage of the
Company's outstanding Voting Stock acquired by FHP through the transfer by
the Company to FHP of Unsubscribed Shares.
"VOTING STOCK" shall mean shares of the Company's capital stock
the holders of which have general voting power.
(b) For purposes of this Agreement, a Person shall be deemed the
"BENEFICIAL OWNER" of any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(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) or upon the
exercise of any conversion, exchange or purchase rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of 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 payment or exchange; or (B) the right to vote
or to direct the voting of, pursuant to any agreement,
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arrangement or understanding (whether or not in writing); or (C) the
right to dispose or to direct the disposition of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any securities of the
Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or understanding
to vote such security (1) arises solely from the grant of a revocable proxy or
consent given to such Person in connection with a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act, and (2) is not also then reportable on
Schedule 13D (or any comparable or successor report) under the Exchange Act;
provided, further, that a Person engaged in business as an underwriter of
securities shall not be deemed the "Beneficial Owner" of securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of the 40-day period immediately following the
date of such acquisition.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time
appoint such Co-Rights Agent or Agents as it may deem necessary or desirable
and determine the respective duties of the Rights Agent and the Co-Rights
Agents.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the Close of Business on the earlier of (i) the tenth
Business Day after a Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as the Company's Board of Directors shall determine) after the
date of the commencement by any Person (other than an Exempt Person) of, or the
date of the first public announcement (such commencement date or announcement
date being herein referred to as the "Offer Date") of the intent of any Person
(other than an Exempt Person) to commence, a tender or exchange offer upon the
successful consummation of which such Person, together with its Affiliates and
Associates, would be the Beneficial Owner of Voting Stock equal to or in excess
of the Trigger Percentage (irrespective of whether any shares are actually
purchased pursuant to such offer) (the tenth Business Day after the first to
occur of a Stock Acquisition Date or an Offer Date being herein referred to as
the "Distribution Date"),
(i) the Rights will automatically attach to, and be evidenced
by, the certificates for Common Stock registered in the names of the
holders of
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Common Stock (which certificates for Common Stock shall be deemed also
to be Right Certificates) and not by separate Right Certificates, and
(ii) each Right will be transferable only in connection with
the transfer of the underlying shares of Common Stock.
As soon as practicable after the Distribution Date, the Rights Agent
will mail, by first-class, insured, postage prepaid mail, to each record holder
of Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Company at the Close of Business on the Distribution Date,
at the address of such holder shown on such records, a Right Certificate, in
substantially the form of Exhibit A hereto, evidencing one Right for each share
of Common Stock so held.
(b) As soon as practicable after the Rights Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B, by first-class mail, postage prepaid, to each record holder
of Common Stock as of the Close of Business on the Rights Record Date, at the
address of such holder shown on the records of the Company.
(c) The Company will cause certificates for Common Stock issued after
the Rights Record Date (including replacement certificates for shares of Common
Stock outstanding on or prior to the Rights Record Date), but prior to the
earliest of (i) the Distribution Date, (ii) the Expiration Date and (iii) the
date, if any, on which the Rights may be redeemed, to have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between the Company and American
Stock Transfer & Trust Company as Rights Agent as the same shall 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 the Company. 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. The Company 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)
or certain transferees of any thereof, whether currently held by or on
behalf of such Person or by any subsequent holder, may be limited as
provided in Section 7(f) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with Common Stock represented by such
certificates shall be
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evidenced by such certificates alone, and the surrender for transfer of any
such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
(d) Until the Distribution Date, the surrender for transfer of any of
the certificates for Common Stock outstanding on or after the Rights Record
Date, with or without a copy of the Summary of Rights attached thereto and with
or without the legend set forth in subsection (c) above, shall also constitute
the transfer of the Rights associated with such Common Stock. After the
Distribution Date, the Rights will be evidenced solely by the Right
Certificates.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of assignment and
certification and of election to purchase shares to be printed on the reverse
thereof) shall be in substantially the form of Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any 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.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights Beneficially Owned by: (i) an Acquiring Person or any
Associate or Affiliate of any Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(f), and any Right Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and reasonably identifiable as such) the
following legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement) or certain transferees thereof. Accordingly, under certain
circumstances as provided in the Rights Agreement, this Right Certificate
and the Rights represented hereby may be limited as provided in Section
7(f) of such Agreement.
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Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any of its Vice Presidents,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued and delivered
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer (as specified above) of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each Right Certificate, the date of each Right Certificate and the
number of each Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(f) and
Section 14, at any time after the Close of Business on the Distribution Date,
and prior to the Close of Business on the Expiration Date or the day prior to
the day, if any, on which the Rights are to be redeemed pursuant to Section 23,
any Right Certificate or Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase such number of Units as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate(s) to be transferred, split up,
combined or exchanged, with the form of assignment on the reverse side(s)
thereof duly completed and executed, at the stock transfer office of the Rights
Agent. Thereupon the Rights Agent shall countersign and deliver to the persons
entitled thereto the Right Certificate(s) requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. Notwithstanding the foregoing, neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
9
transfer of any such surrendered Right Certificate unless and until the
registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Right Certificate and
shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate, if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(f), and unless earlier redeemed as provided
in Section 23, the registered holder of any Right Certificate may exercise the
Rights evidenced thereby in whole or in part at any time after the Distribution
Date upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly completed and executed, to the Rights
Agent at the stock transfer office of the Rights Agent, together with payment of
the Purchase Price for each Unit as to which the Rights are exercised, at or
prior to the Close of Business on the tenth anniversary of the Rights Record
Date or such other date to which the Rights may be extended as provided in this
Agreement (the latest of such dates being herein referred to as the "Expiration
Date"). If at any time after the Distribution Date but prior to the Expiration
Date the Company is unable, under its Certificate of Incorporation, to issue the
number and class of shares required to be issued upon the exercise of all of the
outstanding Rights, the Company may issue upon exercise of any of the Rights
shares of capital stock or other securities of the Company of equivalent value
to the shares so required to be issued ("Equivalent Stock"), as determined by
the Board of Directors.
(b) The Purchase Price for each Unit pursuant to the exercise of a
Right shall initially be $_____, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful money of
the United States of America.
(c) Upon receipt of a Right Certificate, with the form of election
to purchase duly executed, accompanied by payment of the Purchase Price for
the Units to be purchased and an amount equal to any applicable transfer tax
in cash, or by certified check, bank draft or money order payable to the
order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from the Company or any transfer agent of the Company a
certificate for the number of shares to be purchased and the Company will
comply, and hereby irrevocably authorizes its transfer agent to comply, with
all such requests, (ii) requisition from the Company the amount of cash to be
paid in lieu of
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issuance of a fractional share, when appropriate, in accordance with Section
14, and (iii) promptly after receipt of such certificate from any such
transfer agent, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder, and, when appropriate, after receipt
promptly deliver such cash in lieu of a fractional share to or upon the order
of the registered holder of such Right Certificate; provided, however, that
in the case of the purchase, in connection with the exercise of a Right, of
securities other than shares of stock, the Rights Agent shall promptly take
the appropriate actions with respect thereto as shall as nearly as
practicable correspond to the actions described in the foregoing clauses (i)
through (iii).
(d) The Company shall not be required to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or delivery
of Right Certificates, or the issuance or delivery of certificates in a name
other than that of the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, or to issue or deliver any certificates upon
the exercise of any Rights, until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
(e) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
(f) Notwithstanding any provision of this Agreement to the contrary,
upon the occurrence of any of the events described in any of clauses (A), (B),
(C) or (D) of Section 11(a)(ii), the adjustment provided for under Section
11(a)(ii) shall not apply with respect to any Rights that are at the time of the
occurrence of such event Beneficially Owned by (i) an Acquiring Person or by any
Associate or Affiliate of such Acquiring Person (which Acquiring Person or
Affiliate or Associate engages in, or realizes the benefit of, one or more of
the transactions described in clause (A) or clause (B) of Section 11(a)(ii),
realizes the benefits set forth in clause (C) of Section 11(a)(ii) or, alone or
together, become the Beneficial Owner(s) of a number of shares of Voting Stock
which equals or exceeds the percentage of the general voting power as provided
in clause (D) of Section 11(a)(ii), as the case may be), or (ii) a transferee of
an Acquiring Person or of any Associate or Affiliate of such Acquiring Person
(which Acquiring Person or Associate or Affiliate engages in, or realizes the
benefit of, one or more of the transactions described in clause (A) or clause
(B) of Section 11(a)(ii), realizes the benefits set forth in clause (C) of
Section 11(a)(ii) or, alone or together with such Acquiring Person or any such
Associate or Affiliate, become the Beneficial Owner(s) of a number of shares of
Voting Stock which equals or exceeds the percentage of the general voting power
as provided in clause (D) of Section 11(a)(ii), as the case may be) (A) who
becomes a transferee after the Acquiring Person becomes such, or (B) who becomes
a transferee
11
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (1) 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 (2) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(f). Upon
the exercise of such Rights, the holders thereof shall be entitled to
receive, upon payment of the Purchase Price, the number of Units issuable
upon exercise of such Rights without giving effect to the adjustment provided
for under Section 11(a)(ii). The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(f) and Section 4(b) are complied
with, but shall have no liability to any holder of Right Certificates or
other Person as a result of its making or failing to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such can-celled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES; REGISTRATION.
(a) The Company covenants and agrees that it shall (i) on or prior to
the Rights Record Date, take all such action as shall be necessary to cause to
be reserved and kept available out of its authorized and unissued capital stock,
the number, class and series of shares that will be sufficient to permit the
exercise in full of all Rights to be outstanding as of the Rights Record Date,
(ii) no later than promptly following the Distribution Date, take all such
action as shall be necessary to cause to be reserved and kept available out of
its authorized and unissued capital stock, or its authorized and
12
issued shares held in its treasury, the number of additional shares that
will, from time to time, be sufficient to permit the exercise in full of all
Rights from time to time outstanding, (iii) take all such action as may be
necessary to insure that all shares delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable, and (iv) pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect
of the issuance or delivery of the Right Certificates or of any shares upon
the exercise of Rights (except as otherwise provided in Section 7(d)).
(b) The Company agrees to take all such action, from and after the
Distribution Date, as may be necessary or appropriate to permit the issuance of
shares in connection with the exercise of the Rights, including any required
registration under (i) the Securities Act of 1933, as amended from time to time
(the "Securities Act"), and (ii) the securities or "blue sky" laws of the
various states. The Company may temporarily suspend, for a period of time not to
exceed 90 days, the exercisability of the Rights in order to prepare and file a
registration statement or statements for the purpose of effecting any such
registration and permit such statement(s) to become effective. At the
commencement and termination of any such suspension, the Company shall issue a
public announcement and shall provide written notice to the Rights Agent,
stating that the exercisability of the Rights has been temporarily suspended, or
that such suspension has terminated, as the case may be.
(c) If and so long as the stock issuable upon the exercise of Rights
is listed on any national securities exchange, the Company shall use its
reasonable efforts to cause all shares reserved for issuance upon exercise of
Rights to be listed on such exchange upon official notice of issuance upon such
exercise.
Section 10. RECORD DATE. Each Person in whose name any stock
certificate is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including without limitation the
right to vote or to receive dividends or other distributions, and such holder
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
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
13
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare and pay a dividend on the shares which are
subject to the Rights ("Subject Shares") payable in shares of stock of the
Company, (B) subdivide or split the Subject Shares, (C) combine or
consolidate the Subject Shares into a smaller number of shares or effect a
reverse stock split of the Subject Shares or (D) issue any shares of its
capital stock in a reclassification of the Subject Shares (including any
such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then, and in each
such event, except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, split, reverse split,
combination, consolidation or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such
date and at a time when the transfer books of the Company were open, he
would have received upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, split, reverse split, combination,
consolidation or reclassification. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) In the event that at any time after the date of this
Agreement
(A) any Acquiring Person, or any Associate or Affiliate
of any Acquiring Person, directly or indirectly (1) shall merge into
the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries and the Company or such Subsidiary
shall be the continuing or surviving corporation of such merger or
combination and the Common Stock shall remain outstanding and the
outstanding shares thereof shall not be changed into or exchanged for
stock or other securities of the Company or of any other Person or
cash or any other property, or (2) shall sell or otherwise transfer in
one or more transactions, assets to the Company or any of its
Subsidiaries in exchange for 20 percent or more of the shares of any
class of capital stock of the Company or any of its Subsidiaries, and
the Common Stock shall remain outstanding and unchanged, or
(B) directly or indirectly, any Acquiring Person, or any
Associate or Affiliate of any Acquiring Person, shall (1) in one or
more transactions, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class
of capital stock of the Company or any of its Subsidiaries or for
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries or otherwise
obtain from the Company or any of its
14
Subsidiaries, with or without consideration, any additional shares of
any class of capital stock of the Company or any of its Subsidiaries
or other securities exercisable for or convertible into shares of any
class of capital stock of the Company or any of its Subsidiaries
(other than as part of a PRO RATA distribution by the Company or such
Subsidiary to all holders of Common Stock), (2) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise dispose (in one or
more transactions), to, from or with, as the case may be, the Company
or any of its Subsidiaries, assets on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such
Subsidiary would be able to obtain in arm's-length negotiation with an
unaffiliated third party, (3) receive any compensation from the
Company or any of the Company's Subsidiaries other than compensation
for full-time employment as a regular employee, or fees for serving
as director, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (4) receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance provided
by the Company or any of its Subsidiaries, on terms and conditions
less favorable to the Company or such Subsidiary than the Company or
such Subsidiary would be able to obtain in arm's-length negotiation
with an unaffiliated third party, or
(C) during any such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries or
any other similar transaction or series of transactions involving the
Company or any of its Subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person or any Affiliate or Associate
of such Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than one percent the proportionate
share of the outstanding shares of any class of equity securities, or
of securities exercisable for or convertible into equity securities,
of the Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, or
(D) any Person shall become an Acquiring Person otherwise
than pursuant to a Qualified Offer,
then, and in each such case, but subject to the provisions of Section 27,
proper provision shall be made so that each holder of a Right, except as
provided below and in Section 7(f), shall, on and after the later of (I) the
date of the occurrence of an event described in clause (A), (B), (C) or (D)
of this Section 11(a)(ii), or (II) the date of the expiration of the period
within which the Rights may be redeemed pursuant to Section 23 (as the same
may have been amended as provided in Section 26), have the right to receive,
upon exercise thereof at the then current Purchase Price, such number of
shares of Common
15
Stock as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of Units for which a Right is then
exercisable and dividing that product by (y) 50 percent of the current market
price per share of Common Stock (determined in accordance with Section 11(d))
on the date of the occurrence of the relevant event listed above in clause
(A), (B), (C) or (D) of this subparagraph (ii); PROVIDED, HOWEVER, that if
the transaction that would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). The Company shall not consummate any such merger,
combination, transfer or transaction referred to in any of such clauses (A),
(B) and (C) unless prior thereto there shall be sufficient authorized but
unissued Common Stock to permit the exercise in full of the Rights in
accordance with the foregoing sentence, unless the Board of Directors has
determined to issue Equivalent Stock in accordance with Section 7(a);
PROVIDED, HOWEVER, that in no case may the Company consummate any such
merger, combination, transfer or transaction if at the time of or immediately
after such transaction 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.
In the event that the Company issues Equivalent Stock upon the
exercise of any Rights pursuant to the immediately preceding paragraph, then,
upon any such exercise, proper provision shall be made so that the holder of a
Right (except as provided in Section 7(f)) shall have the right to receive, upon
such exercise at the then current Purchase Price, such number of shares or other
units of Equivalent Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of Units for which
a Right is then exercisable and dividing that product by (y) 50 percent of the
current market price per share or other unit of the Equivalent Stock of the
Company (determined on substantially the same basis as is prescribed by Section
11(d) with respect to the valuation of Common Stock) on the date of occurrence
of the relevant event listed above in clause (A), (B), (C) or (D) of this
subparagraph (ii). In the event that at any time the Company should be
prohibited by law, by any provision of its Certificate of Incorporation, or by
any instrument or agreement to which the Company is a party or by which it is
bound, from issuing, or should be unable under its Certificate of Incorporation
to issue, sufficient Equivalent Stock to permit the exercise of all outstanding
Rights in accordance with the foregoing sentence, then, in lieu of issuing such
Equivalent Stock upon such exercise, the Company shall pay to each holder of a
Right (except as provided in Section 7(f)) upon surrender of the Right as
provided herein but without payment of the Purchase Price, an amount in cash for
each Right equal to the Purchase Price.
(b) In case the Company shall at any time after the Rights Record
Date fix a record date for the issuance of rights or warrants to all holders of
Common Stock or Subject Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Common Stock
or Subject Shares or securities convertible into Common Stock or Subject Shares
at a price per share (or having a
16
conversion price per share, if a security convertible into Common Stock) less
than the current market price per share (determined in accordance with
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, of which the
numerator shall be the total number of shares of Common Stock and Subject
Shares outstanding on such record date plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares so to
be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and
of which the denominator shall be the total number of shares of Common Stock
and Subject Shares outstanding on such record date plus the number of
additional shares to be offered for subscription or purchase (or into which
the convertible securities to be offered are initially convertible). In case
such subscription or purchase price may be paid, in whole or in part, in a
form other than cash, the value of such consideration shall be as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent. 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 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 Rights Record
Date fix a record date for the making of a distribution on the shares of Common
Stock or the Subject Shares, whether by way of a dividend, distribution,
reclassification of stock, recapitalization, reorganization or partial
liquidation of the Company or otherwise (and including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation), of subscription rights or warrants (excluding those
referred to in Section 11(b)), evidences of indebtedness or other assets (other
than (i) regular periodic cash dividends, (ii) a dividend payable in Common
Stock or (iii) a distribution which is part of or is made in connection with a
transaction to which Section 11(a)(ii) or Section 13 applies), 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, of which the numerator shall be the current market price per share of
Common Stock (determined in accordance with Section 11(d)) on such record date,
less the fair market value applicable to one share of Common Stock (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
such assets or evidences of indebtedness or of such subscription rights or
warrants so to be distributed, and of which the denominator shall be such
current market price per share of Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
17
(d) For the purpose of any computation hereunder, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; PROVIDED, HOWEVER,
that in the event that the current market price per share of Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of Common
Stock (other than the Rights), and prior to the expiration of 30 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 Common Stock in connection with
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc.,
Automated Quotation System ("NASDAQ"). If on any such date the shares of
Common Stock are not quoted by any such organization, the fair market value
of such shares on such date as determined in good faith by the Board of
Directors of the issuer of such Common Stock shall be used. Any such
determination of current market price shall be described in a statement filed
with the Rights Agent.
For the purpose of any computation hereunder, the "current market
price" of a Unit shall be deemed to be equal to the current market price per
share of Common Stock, and the "current market price" of a Subject Share shall
be deemed to be equal to the current market price per share of Common Stock
divided by the number of Subject Shares which comprise a Unit.
For purposes of this Agreement, the term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent in such
Price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to
18
the nearest one-hundredth of a share, as the case may be. Notwithstanding
the proviso to 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 years from the date of the transaction which gives rise to such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of any Right 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 such shares, contained in Sections 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the shares of
Common Stock 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 represent the right to
purchase, at the adjusted Purchase Price, the number of shares purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest one-hundredth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares purchasable upon the exercise of each Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of Units 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 one-hundredth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been
19
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i) the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and 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 Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 requires that an adjustment
in the Purchase Price be made effective as of the record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
additional shares or securities of the Company, if any, issuable as a
consequence of 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 or securities upon the
occurrence of such event.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the number of shares which
may be acquired upon exercise of the Rights, and such adjustments in the
Purchase Price, in addition to those adjustments expressly required by the other
subsections of this Section 11, as and to the extent that the Company, in its
sole discretion, shall determine to be advisable, in order that, in the event of
(i) any reclassification, consolidation or subdivision of the Common Stock,
(ii) any reorganization or partial liquidation of the Company or similar
transaction, (iii) any issuance wholly for cash of any Common Stock at less than
the current market price, (iv) any issuance wholly for cash of Common Stock or
securities which by their terms are convertible into or exchangeable for Common
Stock, (v) any stock dividends or (vi) any issuance of rights, options or
warrants, hereafter made by the Company to holders of its Common Stock as
provided herein-above in this Section 11, (x) the holders of the Rights in any
such event shall be treated equitably and in accordance with the purpose and
intent of this Agreement, and (y) to the extent reasonably possible, such event
shall not, in the opinion of counsel for the Company,
20
result in the stockholders of the Company being subject to any United States
federal income tax liability by reason thereof.
Section 12. CERTIFICATION OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13, the
Company shall (i) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (ii) promptly
file with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate, and (iii) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of, or the force or effect of, the requirement for such
adjustment.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, at any time after an Acquiring Person has
become such,
(i) the Company shall consolidate with, or merge with and into,
any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(ii) any other Person(s) shall consolidate or merge with and
into the Company, the Company shall be the continuing or surviving
corporation of such merger and, in connection with such consolidation or
merger, all or part of the Common Stock shall be changed into or
exchanged for stock or other securities of the Company or of any other
Person or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50 percent of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person, (other than a pro rata distribution by the
Company of assets (including securities) of the Company or any of its
Subsidiaries to all holders of the Company's Common Stock),
then, on and after the later of (I) the date of the occurrence of an event
described in clause (i), (ii) or (iii) of this Section 13(a), or (II) the date
of the expiration of the period within which the Rights may be redeemed pursuant
to Section 23 (as the same may have been amended as provided in Section 26):
(A) proper provision shall be made so that each holder
of a Right shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, such number of
shares of common stock of
21
the Principal Party as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of Units
for which a Right is then exercisable and dividing that product by
(y) 50 percent of the current market price per share of the common
stock of the Principal Party (determined in the same manner as the
current market price of Common Stock is determined under
Section 11(d)) on the date of consummation of such consolidation,
merger, sale or transfer;
(B) the Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement, and proper provision shall be made for the foregoing,
provided that the Principal Party shall, prior to the first occurrence
of an event described in clause (i), (ii) or (iii) of this Section
13(a), have caused to be reserved out of its authorized and unissued
shares of common stock (or its authorized and issued shares of common
stock held in its treasury), for issuance pursuant to this Agreement,
the number of shares of common stock that will be sufficient to permit
the exercise in full of the Rights after the occurrence of such event;
(C) the term "Company" wherever used in this Agreement
shall thereafter be deemed to refer to such Principal Party; and
(D) the Principal Party shall, in addition to the
reservation of shares of its common stock as provided in the proviso
to clause (B) above, take such steps (including without limitation
compliance with the Company's other obligations as set forth in
Section 9) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the shares of its Common
Stock thereafter deliverable upon the exercise of the Rights;
PROVIDED, HOWEVER, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash,
shares, rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of such
transaction, owned the shares of common stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party
shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent exercise
of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
22
(b) For purposes of this Agreement, "Principal Party" shall mean
(i) in the case of any transaction described in clause (i) or
(ii) of Section 13(a), (A) the Person that is the issuer of the securities
into which shares of Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the
common stock of which has the greatest market value, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives said merger or consolidation, or,
if there is more than one such Person, the Person the common stock of which
has the greatest market value or (y) if the Person that is the other party
to the merger or consolidation does not survive the merger or
consolidation, the Person that does so survive (including the Company if it
survives); and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets
or earning power cannot be determined, whichever of such Persons is the
issuer of common stock having the greatest market value of shares
outstanding;
PROVIDED, HOWEVER, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the common stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation; (2) if the common stock of such Person is not and has not been so
registered and such Person is not a direct or indirect Subsidiary of another
corporation the common stock of which is and has been so registered, "Principal
Party" shall refer to the corporation which ultimately controls such Person;
(3) in case such Person is a Subsidiary, directly or indirectly, of more than
one corporation, the common stocks of all of which are and have been so
registered, "Principal Party" shall refer to whichever of such corporations is
the issuer of common stock having the greatest market value of shares held by
the public; and (4) if the common stock of such Person is not and has not been
so registered and such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1), (2) and (3)
above shall apply to each of the chains of ownership having an interest in such
joint venture as if such Person were a "Subsidiary" of both or all of such joint
venturers and the Principal Party in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as its direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and the Principal Party shall
have
23
executed and delivered to the Rights Agent a supplemental agreement making
valid provision for the results described in clause (A) of Section 13(a) and
confirming that the Principal Party will perform its obligations under this
Section 13(a); PROVIDED, HOWEVER, that in no case may the Company consummate
any such consolidation, merger, sale or transfer if (i) at the time of or
immediately after such transaction 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 transaction, the shareholders of the Person which constitutes, or
would constitute, the Principal Party for purposes of this Section 13 shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. This Section
13 shall not be applicable to a transaction described in Subparagraphs (i), (ii)
or (iii) of Subsection (a) of this Section if (i) such transaction is
consummated with a Person or Persons who acquired Common Stock pursuant to a
Qualified Offer (or a wholly owned subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such transaction or
distributable to shareholders upon conclusion of such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such Qualified Offer and (iii) the form
of consideration being offered to the remaining holders of Common Stock pursuant
to such transaction or distributable to shareholders upon conclusion of such
transaction is the same as the form of consideration paid pursuant to such
Qualified Offer. Upon conclusion of any transaction described in the foregoing
sentence, all Rights shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. If the
Company shall elect not to issue such fractional Rights, in lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such Fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the average
of the high bid and
24
low asked prices in the over-the-counter market, as reported by NASDAQ. If
on any such date the Rights are not quoted by any such organization, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used. Any such determination of current
market value shall be described in a statement filed with the Rights Agent.
(b) The Company shall not be required to issue fractions of shares
upon exercise of a Right or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company shall pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share of Common Stock. For purposes of this Section 14, the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance thereof expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of the
Common Stock), and any registered holder of any Right Certificate (or, prior to
the Distribution Date, any registered holder of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, any other registered holder of the Common
Stock), may, on his own behalf and for his own benefit, enforce, and may
institute and maintain, any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) on and after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent and then if
surrendered at the
25
stock transfer office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock 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
Right Certificate be construed to confer upon the holder of any Right
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 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense incurred, without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or Certificate for Common Stock 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, acting with reasonable care, to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
26
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned,
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned, and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name, and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President,
any Vice President, or the Secretary of the Company and
27
delivered to the Rights Agent, and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof), nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate, nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
13 or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment), nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of stock to be issued pursuant to this Agreement or
any Right Certificate or as to whether any shares of stock 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 performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President or the Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company 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
28
and freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first obtaining the Company's approval.
Section 21. CHANGE OF RIGHTS AGENT. Unless the Company and the
Rights Agent agree to a shorter time period, the Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 15 days' notice in writing mailed to the Company and to each transfer agent
of Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. Unless the Company and the Rights Agent agree
to a shorter time period, the Company may remove the Rights Agent or any
successor Rights Agent upon 15 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 15 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of California (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of California) in good standing, having a stock transfer office in the
State of California, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or
29
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 Common Stock and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Expiration Date, the Purchase Price per share or the number or
kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option and as
provided herein, and notwithstanding the provisions of Sections 11 and 13 of
this Agreement, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, reclassification or similar
transaction occurring after the date hereof (such redemption price being herein
referred to as the "Redemption Price") at any time up to the Close of Business
on the tenth Business Day after a Stock Acquisition Date; PROVIDED, HOWEVER, the
Board of Directors of the Company may authorize the redemption of the Rights
after the time that an Acquiring Person has become such only if (i) there is at
least one Continuing Director then in office and (ii) a majority of all of the
Continuing Directors then in office approves such redemption.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, the Company shall make a public
announcement thereof, and from and after the date of such announcement, without
any further action and without any further 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. As soon as practicable after the
election of the Board of Directors to redeem the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
30
Section 24. NOTICE OF PROPOSED ACTIONS. In case the Company, after
the Rights become exercisable, shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Stock or the Subject Shares or
to make any other distribution to the holders of its Common Stock or Subject
Shares (other than a regular periodic cash dividend), or (ii) to offer to the
holders of its Common Stock or Subject Shares rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock or Subject Shares (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock) or any recapitalization or reorganization of the Company, or (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50 percent of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Right, in accordance with Section 25, a notice of such proposed
action, which shall specify the record date for the purposes of such dividend,
distribution of rights or warrants, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock and/or Subject Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty days prior to the
record date for determining holders of the Common Stock and/or Subject Shares
for purposes of such action, and in the case of any such other action, at least
twenty days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock and/or Subject Shares,
whichever shall be the earlier. The failure to give notice required by this
Section 24 or any defect thereon shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
Section 25. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Corporate Trust Department
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
31
Talbert Medical Management Holdings Corporation
3540 Howard Way
Costa Mesa, California 92626
Attention: President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which lengthening or
shortening, after the time that any Acquiring Person has become such, shall be
effective only if (x) there is at least one Continuing Director then in office
and (y) a majority of all of the Continuing Directors then in office have
approved of such action), or (iv) to change or supplement the provisions hereof
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates;
PROVIDED, HOWEVER, 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 which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, 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 Stock. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Purchase Price or the number of shares or
Units for which a Right is exercisable.
Section 27. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become subject to the provisions of Section 7(f) hereof) for Common Stock
at an exchange ratio
32
of one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 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 shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly 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 promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice 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 Stock 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 subject to the
provisions of Section 7(f) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient authorized Common
Stock to permit an exchange of Rights as contemplated in accordance with this
Section, the Company shall take all such action as may be necessary to authorize
additional Common Stock or Equivalent Stock for issuance upon exchange of the
Rights.
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. DETERMINATION AND ACTIONS TAKEN BY THE BOARD OF
DIRECTORS. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock (or other applicable securities hereunder) outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock (or other securities) of
which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) (as in effect on the date of this
Agreement) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to such Board or to 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 (B) below, all
33
omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (A) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (B) not
subject the Board to any liability to the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the holders of Common Stock) any legal or equitable right,
remedy or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock).
Section 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State. The rights and obligations of the Rights
Agent under this Agreement shall be governed by and construed in accordance with
the laws in effect in the State of Delaware.
Section 32. 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 33. SECTION HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 34. 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, illegal, or unenforceable, (i) such invalid,
illegal or unenforceable term, provision, covenant or restriction shall
nevertheless be valid, legal and enforceable to the extent, if any, provided by
such court or authority, and (ii) the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE COMPANY:
By:
------------------------------
THE RIGHTS AGENT:
By:
------------------------------
35
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF
REDEMPTION IS MADE. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE
AGREEMENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO
A PERSON WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE
OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR CERTAIN TRANSFEREES
THEREOF, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN
LIMITATIONS IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7 OF THE RIGHTS AGREEMENT.
RIGHT 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 Rights Agreement, dated as of ________________ (the "Rights
Agreement"), between Talbert Medical Management Holdings Corporation, (the
"Company"), and American Stock Transfer & Trust Company (the "Rights Agent"),
to purchase from the Company, unless the Rights have been previously
redeemed, at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to the Expiration Date (as such term is
defined in the Rights Agreement), or the date, if any, on which the Rights
evidenced by this Certificate may be redeemed, at the stock transfer office
of the Rights Agent, or its successors as Rights Agent, one one-hundredth of
a fully paid and nonassessable share of Junior Participating Preferred Stock
("Preferred Shares"), at a purchase price of $____ (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly completed and executed. The number of Rights
evidenced by this Right Certificate as set forth above (and the number of
shares which may be purchased upon exercise thereof), and the Purchase Price
set forth above, are the number and Purchase Price as of the
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date of the Rights Agreement based on the shares of Common Stock of the
Company as constituted at such date.
Upon the occurrence of an event described in clause (A), (B), (C) or
(D) of Section 11(a)(ii) of the Rights Agreement, the holder of any Rights that
are, or were, beneficially owned by an Acquiring Person or an Associate or
Affiliate thereof (as such terms are defined in the Rights Agreement) or certain
transferees thereof which engaged in, or realized the benefit of, an event or
transaction or transactions described in clause (A), (B), (C) or (D) of such
Section 11(a)(ii), shall not be entitled to the benefit of the adjustment
described in such Section 11(a)(ii).
As provided in the Rights Agreement, the Purchase Price and the number
and class of shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and at the principal office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stock transfer office of the Rights Agent set forth above, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase such number of
shares as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right.
No fractional shares will be issued upon the exercise of any Rights
evidenced hereby, but in lieu thereof a cash payment may be made, as provided in
the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares or of any
other
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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 Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the
Company. Dated as of ____________, 199_.
Attest:
By:
- ----------------------------------- -----------------------------------
Secretary Title:
Countersigned:
- -----------------------------------
By:
-------------------------------
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________ hereby sells,
assigns and transfers unto __________________
____________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney to transfer the within Right Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated: ____________, 19__ ______________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) this Right 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 an Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: ______________, 19__ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To the Company and the Rights Agent:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate and to
purchase the shares issuable upon the exercise of such Rights and requests
that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number:
------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
____________________________________________________________ If such number of
Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number:
------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
Dated: ______________, 19__
Signature: __________________
(Signature must conform in all respects to name
of holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: ______________, 19__ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
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