SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 30, 2002
CENTENE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 6324 04-1406317
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
7711 Carondelet Avenue, Suite 800
Saint Louis, Missouri 63105
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(Address of principal executive office and zip code)
(314) 725-4477
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On August 26, 2002, the Board of Directors (the "Board of Directors")
of Centene Corporation (the "Company"), declared a dividend of one Right for
each outstanding share of the Company's Common Stock, $0.001 par value per share
(the "Common Stock"), to stockholders of record at the close of business on
September 10, 2002 (the "Record Date"). Each "Right" entitles the registered
holder to purchase from the Company one one-thousandth of a share of the
Company's Series A Junior Participating Preferred Stock, $0.001 par value per
share (the "Preferred Stock"), at a purchase price of $170.00 in cash per share,
subject to adjustment (the "Purchase Price"). The description and terms of the
Rights are set forth in a Rights Agreement, dated as of August 30, 2002 (the
"Rights Agreement"), between the Company and Mellon Investor Services LLC, as
Rights Agent.
Initially, the Rights are not exercisable and will be attached to all
certificates representing outstanding shares of Common Stock, and no separate
certificate representing Rights (a "Rights Certificate") will be distributed.
The Rights will separate from the Common Stock, and the distribution date will
occur, upon the earlier of (i) 10 business days following the first date of a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Stock (the "Stock
Acquisition Date"), or (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of the outstanding Common Stock (the
"Distribution Date"). The Distribution Date may be deferred in circumstances
determined by the Board of Directors. In addition, certain inadvertent
acquisitions will not trigger the occurrence of the Distribution Date. Until the
Distribution Date (or earlier redemption or expiration of the Rights), (i) the
Rights will be evidenced by the Common Stock certificates outstanding on the
Record Date or by new Common Stock certificates issued after the Record Date
which contain a notation incorporating the Rights Agreement by reference, (ii)
the Rights will be transferred with and only with such Common Stock
certificates, and (iii) the surrender for transfer of any certificates
representing shares of Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will
expire upon the close of business on August 30, 2012 (the "Final Expiration
Date") unless earlier redeemed or exchanged. As soon as practicable after the
Distribution Date, separate Rights Certificates will be mailed to the holders of
record of the Common Stock as of the close of business on the Distribution Date
and, thereafter, the separate Rights Certificates alone will represent the
Rights. Except as otherwise determined by the Board of Directors, and except for
shares of Common Stock issued upon exercise, conversion or exchange of then
outstanding options, convertible or exchangeable securities or other contingent
obligations to issue shares or pursuant to any employee benefit plan or
arrangement, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that any person becomes an Acquiring Person, then,
promptly following the first occurrence of such event, each holder of a Right
shall thereafter have the right to receive, upon exercise, that number of shares
of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) which equals the exercise price of the Right divided
by 50% of the current market price per share of Common Stock at the date of the
occurrence of such event. However, Rights are not exercisable following such
event until such time as the Rights are no longer redeemable by the Company.
Notwithstanding any of the foregoing, following the occurrence of such event,
all Rights that are, or, under certain circumstances, were, beneficially owned
by any Acquiring Person will be null and void. The event summarized in this
paragraph is referred to as an "A Trigger Event."
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For example, at an exercise price of $60 per Right, each Right not
owned by an Acquiring Person following an A Trigger Event would entitle its
holder to purchase for $60 such number of shares of Common Stock as equals $60
divided by one-half of the current market price of the Common Stock. Assuming
that the Common Stock had a market price of $30 per share at such time, the
holder of each valid Right would be entitled to purchase four shares of Common
Stock, having a market value of 4 x $30, or $120, for $60.
In the event that, at any time after any person becomes an Acquiring
Person, (i) the Company is consolidated with, or merged with and into, another
entity and the Company is not the surviving entity of such consolidation or
merger or if the Company is the surviving entity, but shares of its outstanding
Common Stock are changed or exchanged for stock or securities or cash or any
other property, or (ii) more than 50% of the Company's assets or earning power
is sold or transferred, each holder of a Right (except Rights which previously
have been voided) shall thereafter have the right to receive, upon exercise,
that number of shares of common stock of the acquiring company which equals the
exercise price of the Right divided by 50% of the current market price of such
common stock at the date of the occurrence of the event. The events summarized
in this paragraph are referred to as a "B Trigger Event." An A Trigger Event and
B Trigger Event are collectively referred to as "Triggering Events."
For example, at an exercise price of $60 per Right, each valid Right
following a B Trigger Event would entitle its holder to purchase for $60 such
number of shares of common stock of the acquiring company as equals $60 divided
by one-half of the current market price of such common stock. Assuming that such
common stock had a market price of $30 per share at such time, the holder of
each valid Right would be entitled to purchase four shares of common stock of
the acquiring company, having a market value of 4 x $30, or $120, for $60.
At any time after the occurrence of an A Trigger Event, when no person
owns a majority of the Common Stock, the Board of Directors may exchange the
Rights (other than Rights owned by such Acquiring Person which have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-thousandth of a share of Preferred Stock, or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges, per Right.
The Purchase Price payable, and the number of units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the then-current market price of the Preferred Stock, or (iii) upon
the distribution to holders of the Preferred Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings) or of subscription rights or warrants (other than those
referred to above). The number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a Stock split of the Common
Stock or a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common stock occurring, in
any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock, other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, will be
issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors, a minimum
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preferential quarterly dividend payment of $10 per share or, if greater, an
aggregate dividend of 1000 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Stock will be
entitled to a minimum preferential liquidation payment of $1000 per share, plus
an amount equal to accrued and unpaid dividends, and will be entitled to an
aggregate payment of 1000 times the payment made per share of Common Stock. Each
share of Preferred Stock will have 1000 votes, voting together with the Common
Stock. In the event of any merger, consolidation or other transaction in which
Common Stock is changed or exchanged, each share of Preferred Stock will be
entitled to receive 1000 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions. Because of the
nature of the Preferred Stock's dividend, liquidation and voting rights, the
value of one one-thousandth of a share of Preferred Stock purchasable upon
exercise of each Right should approximate the value of one share of Common
Stock.
At any time prior to the earlier of the tenth business day after the
Stock Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the "Redemption Price"), payable in cash
or stock. Immediately upon the redemption of the Rights or such earlier time as
established by the Board of Directors in the resolution ordering the redemption
of the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. The Rights may also be
redeemable following certain other circumstances specified in the Rights
Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. Although the distribution of the Rights should
not be taxable to stockholders or to the Company, stockholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock or for common stock of the acquiring company
as set forth above.
Any provision of the Rights Agreement, other than the redemption price,
may be amended by the Board of Directors prior to such time as the Rights are no
longer redeemable. Once the Rights are no longer redeemable, the Board of
Directors' authority to amend the Rights is limited to correcting ambiguities or
defective or inconsistent provisions in a manner that does not adversely affect
the interest of holders of Rights.
The Rights are intended to protect the stockholders of the Company in
the event of an unfair or coercive offer to acquire the Company and to provide
the Board of Directors with adequate time to evaluate unsolicited offers. The
Rights may have anti-takeover effects. The Rights will cause substantial
dilution to a person or group that attempts to acquire the Company without
conditioning the offer on a substantial number of Rights being acquired. The
Rights, however, should not affect any prospective offer or willing to make an
offer at a fair price and determined by the Board of Directors. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
attached as Exhibit 4.1 and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
Exhibit
Number Description
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4.1 Rights Agreement, between Centene Corporation and
Mellon Investor Services LLC, as Rights Agent,
dated as of August 30, 2002, which includes as
EXHIBIT A the Terms of the Series A Junior
Participating Preferred Stock, as EXHIBIT B the
Form of Rights Certificates and as EXHIBIT C the
Summary of Rights to Purchase Preferred Stock.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this 30th day of August 2002.
CENTENE CORPORATION
By: /s/ Michael F. Neidorff
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Michael F. Neidorff
President and Chief Executive Officer
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