___________________________________________
MAXICARE HEALTH PLANS, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 24, 1998
___________________________________________
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . 6
Section 3. Issuance of Right Certificates. . . . . . . . . 6
Section 4. Form of Right Certificate . . . . . . . . . . . 8
Section 5. Countersignature and Registration . . . . . . . 8
Section 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed
Lost or Stolen Right Certificate . . . . . . . 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . 10
Section 8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . 13
Section 9. Reservation and Availability of
Preferred Shares . . . . . . . . . . . . . . . 13
Section 10. Preferred Shares Record Date. . . . . . . . . . 14
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights . . . . . . 15
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . . . . . . . . . . . . . 22
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 23
Section 14. Fractional Rights and Fractional Shares . . . . 25
Section 15. Rights of Action. . . . . . . . . . . . . . . . 27
Section 16. Agreement of Right Holders. . . . . . . . . . . 27
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . 28
Section 18. Concerning the Rights Agent . . . . . . . . . . 29
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . 29
Section 20. Duties of Rights Agent. . . . . . . . . . . . . 30
Section 21. Change of Rights Agent. . . . . . . . . . . . . 32
Section 22. Issuance of New Right Certificates. . . . . . . 33
Section 23. Redemption and Termination. . . . . . . . . . . 34
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . 36
Section 25. Notice of Certain Events. . . . . . . . . . . . 37
Section 26. Notices . . . . . . . . . . . . . . . . . . . . 38
Section 27. Supplements and Amendments. . . . . . . . . . . 38
Section 28. Determination and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . . . . 39
Section 29. Successors. . . . . . . . . . . . . . . . . . . 40
Section 30. Benefits of this Agreement. . . . . . . . . . . 40
Section 31. Severability. . . . . . . . . . . . . . . . . . 40
Section 32. Governing Law . . . . . . . . . . . . . . . . . 40
Section 33. Counterparts. . . . . . . . . . . . . . . . . . 40
Section 34. Descriptive Headings. . . . . . . . . . . . . . 40
Exhibits
A . . . . . . Certificate of Designation of Series B Preferred
Stock of Maxicare Health Plans, Inc.
B . . . . . . Form of Right Certificate, Form of Assignment, and
Form of Election to Purchase
C . . . . . . Summary of Rights Agreement
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person . . . . . . . . . . . . . . . . . . Section 1(a)
Act. . . . . . . . . . . . . . . . . . . . . . . . . Section 1(b)
Adjustment Shares. . . . . . . . . . . . . . . .Section 11(a)(ii)
Adjusted Number of Shares. . . . . . . . . . . Section 11(a)(iii)
Adjusted Purchase Price. . . . . . . . . . . . Section 11(a)(iii)
Affiliate. . . . . . . . . . . . . . . . . . . . . . Section 1(c)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . .Preface
Associate. . . . . . . . . . . . . . . . . . . . . . Section 1(c)
Beneficial Owner . . . . . . . . . . . . . . . . . . Section 1(d)
Beneficially Own . . . . . . . . . . . . . . . . . . Section 1(d)
Business Day . . . . . . . . . . . . . . . . . . . . Section 1(e)
Capital Stock Equivalent . . . . . . . . . . . Section 11(a)(iii)
Close of Business. . . . . . . . . . . . . . . . . . Section 1(f)
Common Shares. . . . . . . . . . . . . . . . . . . . Section 1(g)
Continuing Directors. . . . . . . . . . . . . . . . Section 1(h)
Corporation. . . . . . . . . . . . . . . . . . . . . . . .Preface
Current Per Market Price . . . . . . . . . . . . Section 11(d)(i)
Current Per Share Market Price . . . . . . . . . Section 11(d)(i)
Disinterested Directors. . . . . . . . . . . . . . . Section 1(i)
Distribution Date. . . . . . . . . . . . . . . . . . Section 3(a)
Equivalent Preferred Shares. . . . . . . . . . . . .Section 11(b)
Exchange Act . . . . . . . . . . . . . . . . . . . . Section 1(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . .Section 24(a)
Final Expiration Date. . . . . . . . . . . . . . . . Section 7(a)
Grandfathered Stockholder . . . . . . . . . . . . . Section 1(l)
Interested Stockholder . . . . . . . . . . . . . . . Section 1(m)
Nasdaq . . . . . . . . . . . . . . . . . . . . . Section 11(d)(i)
Permitted Offer. . . . . . . . . . . . . . . . . . . Section 1(n)
Person . . . . . . . . . . . . . . . . . . . . . . . Section 1(o)
Preferred Shares . . . . . . . . . . . . . . . . . . Section 1(p)
Principal Party. . . . . . . . . . . . . . . . . . .Section 13(b)
Proration Factor . . . . . . . . . . . . . . . Section 11(a)(iii)
Purchase Price . . . . . . . . . . . . . . . . . . . Section 4(a)
Record Date. . . . . . . . . . . . . . . . . . . . . . . .Preface
Redemption Date. . . . . . . . . . . . . . . . . . . Section 7(a)
Redemption Price . . . . . . . . . . . . . . . . Section 23(a)(i)
Right. . . . . . . . . . . . . . . . . . . . . . . . . . .Preface
Right Certificate. . . . . . . . . . . . . . . . . . Section 3(a)
Rights Agent . . . . . . . . . . . . . . . . . . . . . . .Preface
Section 11(a)(ii) Event. . . . . . . . . . . . . . . Section 1(r)
Section 13 Event . . . . . . . . . . . . . . . . . . Section 1(s)
Security . . . . . . . . . . . . . . . . . . . . Section 11(d)(i)
Shares Acquisition Date. . . . . . . . . . . . . . . Section 1(t)
Subsidiary . . . . . . . . . . . . . . . . . . . . . Section 1(u)
Summary of Rights Agreement. . . . . . . . . . . . . Section 3(b)
Then Outstanding . . . . . . . . . . . . . . . . . . Section 1(d)
Trading Day. . . . . . . . . . . . . . . . . . . Section 11(d)(i)
Transaction. . . . . . . . . . . . . . . . . . . . . Section 1(v)
Transaction Person . . . . . . . . . . . . . . . . . Section 1(w)
Triggering Event . . . . . . . . . . . . . . . . . . Section 1(x)
Voting Securities. . . . . . . . . . . . . . . . . .Section 13(a)
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 24, 1998 (the
"Agreement"), between Maxicare Health Plans, Inc., a Delaware
corporation (the "Corporation"), and American Stock Transfer &
Trust Company, a New York corporation (the "Rights Agent").
The Board of Directors of the Corporation has authorized
and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Corporation outstanding at the close of business on March 16,
1998 (the "Record Date"), each Right representing the right to
purchase one five-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of
one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to Common Shares that
shall become outstanding after the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration Date
in accordance with the provisions of Section 22 of this
Agreement.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person
who or which, together with all Affiliates and Associates of such
Person, without the prior approval of at least a majority of the
Disinterested Directors (as hereinafter defined), shall be the
Beneficial Owner of 15% or more of the then outstanding Common
Shares (other than as a result of a Permitted Offer (as
hereinafter defined)) or was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be
the Beneficial Owner of 15% or more of the then outstanding
Common Shares. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Corporation, (ii)
any Subsidiary of the Corporation, (iii) any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation,
(iv) any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan,
(v) any Person, who or which together with all Affiliates and
Associates of such Person becomes the Beneficial Owner of 15% or
more of the then outstanding Common Shares as a result of the
acquisition of Common Shares directly from the Corporation, or
(vi) any Grandfathered Stockholder: provided, however, that if,
(X) without the prior approval of at least a majority of the
Disinterested Directors, any Grandfathered Stockholder acquires
additional Common Shares (other than Common Shares acquired
directly, or options or convertible securities to acquire Common
Shares directly from the Corporation) after the date hereof and
such Grandfathered Stockholder's Beneficial Ownership of Common
Stock exceeds 20% of the Common Shares outstanding or (Y) any
Grandfathered Stockholder files a Schedule 13D with the
Securities and Exchange Commission disclosing that the
Grandfathered Stockholder now holds the Common Shares with any
purpose, or with the effect of, changing or influencing the
control of the Corporation, or in connection with or as a
participant in any transaction having such purpose or effect,
including any xxxx saction under Rule 13d-3(b) under the
Securities Exchange Act of 1934 (the "Exchange Act") and such
Grandfathered Stockholder's Beneficial Ownership of Common Shares
equals 15% or more, then such Grandfathered Stockholder shall
become an Acquiring Person, and (B) no Person shall be deemed to
be an "Acquiring Person" either (X) as a result of the
acquisition of Common Shares by the Corporation which, by
reducing the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person;
except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (X)) as a result of the
acquisition of Common Shares by the Corporation, and (ii) after
such share acquisition by the Corporation, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if (i) within 5 business days
after such Person would otherwise have become an Acquiring Person
(but for the operation of this subclause (Y)), such Person
notifies the Board of Directors that such Person did so
inadvertently and (ii) within the latter of (a) 2 Business Days
after such notification or (b) 20 Business Days after such
notification unless the Disinterested Directors notifies such
Person in writing that they have determined (which determination
may be based on any public statement or filing of such Person)
that such Person acquired the Common Shares with the purpose, or
with the effect of, changing or influencing the control of the
Corporation, or in connection with or as a participant in any
transaction having such purpose or effect, including any
transaction under Rule 13d-3(b) under the Exchange Act, such
Person is the Beneficial Owner of less than 15% of the
outstanding Common Shares.
(b) "Act" shall mean the Securities Act of
1933, as amended.
(c) "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
amended provided that the limited partners of a limited
partnership shall not be deemed to be Associates of such limited
partnership solely by virtue of their limited partnership
interest.
(d) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable or convertible immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedules 13D or 13G under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities) relating to the
acquisition, holding, voting (except to the extent contemplated
by the proviso to Section l(d)(ii)(B)) or disposing of any
securities of the Corporation.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding", when
used with reference to a Person's Beneficial Ownership of
securities of the Corporation, shall mean the number of such
securities then issued and out-standing together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other
than a Saturday, Sunday or U.S. federal holiday.
(f) "Close of Business" on any given date
shall mean 5:00 P.M., New York time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference
to the Corporation shall mean the shares of Common Stock, par
value $0.01 per share, of the Corporation or, in the event of a
subdivision, combination or consolidation with respect to such
shares of Common Stock, the shares of Common Stock resulting from
such subdivision, combination or consolidation. "Common Shares"
when used with reference to any Person other than the Corporation
shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(h) "Continuing Director" shall mean a Person
who was a member of the Board of Directors of the Corporation
elected by the public stockholders of the Corporation prior to
the date hereof, or a Person recommended to succeed a Continuing
Director by a majority of Continuing Directors.
(i) "Disinterested Directors" shall mean the
members of the Board of Directors who are Continuing Directors
and who are not (i) officers or employees of the Corporation,
(ii) Acquiring Persons or their Affiliates or Associates or
representatives of any of them, or (iii) any Person who was
directly or indirectly proposed or nominated as a director of the
Corporation by an Acquiring Person or a Transaction Person.
(j) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(k) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
(l) "Grandfathered Stockholder" shall mean
any Person who as of the date hereof has filed a Schedule 13G
with the Securities and Exchange Commission disclosing Beneficial
Ownership by such Person and his Affiliates and Associates of
more than 15% of the Common Shares.
(m) "Interested Stockholder" shall mean any
Acquiring Person or any Affiliate or Associate of any Acquiring
Person or any other Person in which any such Acquiring Person,
Affiliate or Associate has an interest, or any other Person
acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.
(n) "Permitted Offer" shall mean a tender or
exchange offer which is for all outstanding Common Shares at a
price and on terms determined, prior to the purchase of shares
under such tender or exchange offer, by at least a majority of
the Disinterested Directors, to be adequate (taking into account
all factors that such Disinterested Directors deem relevant
including, without limitation, prices that could reasonably be
achieved if the Corporation or its assets were sold on an orderly
basis designed to realize maximum value) and otherwise in the
best interests of the Corporation and its stockholders (other
than the Person or any Affiliate or Associate thereof on whose
basis the offer is being made) taking into account all factors
that such Disinterested Directors may deem relevant.
(o) "Person" shall mean any individual, firm,
partnership, corporation, limited liability company, trust,
association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(p) "Preferred Shares" shall mean shares of
Series B Preferred Stock, with a par value of $0.01 per share of
the Corporation having the relative rights, preferences and
limitations set forth in the Form of Certificate of Designation
of Series B Preferred Stock of Maxicare Health Plans, Inc.
attached to this Agreement as Exhibit A.
(q) "Redemption Date" shall have the meaning
set forth in Section 7 hereof.
(r) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(s) "Section 13 Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a) hereof.
(t) "Shares Acquisition Date" shall mean the
first date of public announce- ment (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to the Exchange Act) by the Corporation or an Acquiring
Person that an Acquiring Person has become such; provided, that,
if such Person is determined not to have become an Acquiring
Person pursuant to Section l(a)(B)(Y) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(u) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
(v) "Transaction" shall mean any merger,
consolidation or sale of assets or earning power described in
Section 13(a) hereof or any acquisition of shares of Common Stock
of the Company which would result in a Person becoming a
Transaction Person.
(w) "Transaction Person" with respect to a
Transaction shall mean (x) any Person who (i) is or will become
an Acquiring Person if the Transaction were to be consummated and
(ii) directly or indirectly proposed or nominated a director of
the Corporation which director is in office at the time of
consideration of the Transaction, or (y) an Affiliate or
Associate of such a Person.
(x) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the Shares
Acquisition Date, or (ii) the close of business on the tenth day
(or such later date as may be determined by action of the
Corporation's Board of Directors) after the date of the
commencement by any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person
or entity organized, appointed or established by the Corporation
for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other
than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or of any Subsidiary of
the Corporation or any Person or entity organized, appointed or
established by the Corporation for or pursuant to the terms of
any such plan) to commence (which intention to commence remains
in effect for five Business Days after such announcement), a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the
case of both (i) and (ii), any such date which is after the date
of this Agreement and prior to the issuance of the Rights), the
earliest of such dates being herein referred to as the
"Distribution Date", (x) the Rights will be evidenced (subject to
the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in
connection with the transfer of the underlying Common Shares
(including a transfer to the Corporation); provided, however,
that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a
result of such tender offer. As soon as practicable after the
Distribution Date, the Corporation will prepare and execute, the
Rights Agent will countersign, and the Corporation will send or
cause to be sent by first-class, postage prepaid mail, to each
record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Corporation, a Right Certificate, substantially in
the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As promptly as practicable following the
Record Date, the Corporation will send a copy of a Summary of
Rights Agreement, in substantially the form of Exhibit C hereto
(the "Summary of Rights Agreement"), by first-class, postage-
prepaid mail, to each record holder of Common Shares as of the
close of business on the Record Date, at the address of such
holder shown on the records of the Corporation. With respect to
certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights Agreement attached
thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights
Agreement attached thereto, shall also constitute the transfer of
the Rights associated with such Common Shares.
(c) Certificates for Common Shares which
become outstanding (including, without limitation, reacquired
Common Shares referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date, shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Maxicare Health Plans, Inc. and
American Stock Transfer & Trust Company , dated as of
February 24, 1998 (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 Maxicare Health Plans, Inc. 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.
Maxicare Health Plans, Inc. 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 an Affiliate or
Associate thereof (as defined in the Rights Agreement)
and certain related persons, whether currently held by or
on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases
or acquires any Common Shares after the Record Date but prior to
the Distribution Date, any Rights associated with such Common
Shares shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificate.
(a) The Right Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) may have such marks of identification or
designation and such legends, summaries or endorsements printed
thereon as the Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange or trading market on which the Rights may
from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such
number of one five-hundredths of a Preferred Share as shall be
set forth therein at the price per one five-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights which
are null and void pursuant to Section 7(e) of this Agreement and
any Right Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) 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). Accordingly, this Right Certificate
and the Rights represented hereby are null and void.
Provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Right Certificate.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Corporation
by its Chief Executive Officer, its President, any of its Vice
Presidents, either manually or by facsimile signature, shall have
affixed thereto the Corporation's seal or a facsimile thereof,
and shall be attested by the Chief Financial Officer, Secretary
or an Assistant Secretary of the Corporation, either manually or
by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Corporation who shall have signed any of the Right Certificates
shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and deliver y
by the Corporation, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the
Corporation with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such
officer of the Corporation; and any Right Certificate may be
signed on behalf of the Corporation by any person who, at the
actual date of the execution of such Right Certificate, shall be
a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of such Right
Certificate or transfer, 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
of the Right Certificates and the certificate number and the date
of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificate. Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to
the close of business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one five-
hundredths of a Preferred Share (or, following a Triggering
Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitle such
holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Corporation shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate 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
Corporation shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as
so requested. The Corporation 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.
Upon receipt by the Corporation 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, at the Corporation's request,
reimbursement to the Corporation 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 Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder 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(e) hereof, the
registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office or offices
of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price for the total number of
one five-hundredths of a Preferred Share (or other securities, as
the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the close of
business on February 23, 2008 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") or (iii) the time at
which the Rights are exchanged pursuant to Section 24 hereof.
(b) The Purchase Price for each one five-
hundredth of a Preferred Share pursuant to the exercise of a
Right shall initially be $45.00, shall be subject to adjustment
from time to time as provided in the next sentence and in
Sections 11 and 13(a) hereof and shall be payable in accordance
with paragraph (c) below. Anything in this Agreement to the
contrary notwithstanding, in the event that at any time after the
date of this Agreement and prior to the Distribution Date, the
Corporation shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares,
then in any such case, each Common Share outstanding following
such subdivision, combination or consolidation shall continue to
have a Right associated therewith and the Purchase Price
following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price
immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.
The adjustment provided for in the preceding sentence shall be
made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares (or other
securities, as the case may be) to be purchased and an amount
equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 6
hereof by certified check, cashier's check or money order payable
to the order of the Corporation, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares
to be purchased and the Corporation hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if
the Corporation, in its sole discretion, shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights
hereunder into a depository, requisition from the depository
agent depository receipts representing such number of one five-
hundredths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depository agent) and the Corporation will direct the depository
agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right
Certificate. In the event that the Corporation is obligated to
issue other securities (including Common Shares) of the
Corporation pursuant to Section 11(a) hereof, the Corporation
will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if
and when appropriate.
In addition, in the case of an exercise of the Rights by
a holder pursuant to Section 11(a)(ii), the Rights Agent shall
return such Right Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Right Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such
Right Certificate were so exercised, the Rights Agent shall
indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
(d) In case the registered holder of any
Right Certificate shall exercise (except pursuant to Section
11(a)(ii)) 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 and
delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of
Section 14 hereof, or the Rights Agent shall place an appropriate
notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of
a Section 11(a)(ii) Event, any Rights beneficially owned by (i)
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof) 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 the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Corporation has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The
Corporation shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the
Corporation shall be obligated to undertake any action with
respect to a registered holder upon the o ccurrence 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 Corporation shall
reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise (other than a partial exercise), transfer, split up,
combination or exchange shall, if surrendered to the Corporation
or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the
Rights Agent, shall be canceled by it and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Corporation
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 Corporation
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Corporation, or
shall, at the written request of the Corporation, destroy such
canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Corporation.
Section 9. Reservation and Availability of Preferred
Shares. The Corporation covenants and agrees that at all times
prior to the occurrence of a Section 11(a)(ii) Event it will
cause to be reserved and kept available out of its authorized and
unissued Preferred Shares, or any authorized and issued Preferred
Shares held in its, treasury, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all
outstanding Rights and, after the occurrence of a Section
11(a)(ii) Event, shall, to the extent reasonably practicable, so
reserve and keep available a sufficient number of Common Shares
(and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares or any
other securities) issuable upon the exercise of the Rights may be
listed on any national securities exchange or quoted on National
Association of Securities Dealers, Inc. Automated Quotations
System ("Nasdaq"), the Corporation shall use its best efforts to
cause, from and after such time as the Rights become exercisable,
all shares (or other securities) reserved for such issuance to be
listed on such exchange upon official notice of issuance or
quoted on Nasdaq upon such exercise.
The Corporation covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred
Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable shares or
securities.
The Corporation further covenants and agrees that it will
pay when due and payable any and all U.S. 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
Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of Rights. The Corporation
shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery
of certificates or depository receipts for the Preferred Shares
(or Common Shares and/or other securities, as the case may be) in
a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to
issue or to deliver any certificates or depository receipts for
Preferred Shares (or Common Shares and/or other securities, as
the case may be) 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 Corporation's reasonable
satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file,
as soon as practicable following the Shares Acquisition Date, a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act and
the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11(a)(ii). The
Corporation will also take such action as may be appropriate
under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each
person in whose name any certificate for Preferred Shares (or
Common Shares and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) 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; provided, however, that, if
the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as
the case may be) transfer books of the Corporation are closed,
such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer
books of the Corporation are open.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Corporation
shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in
which the Corporation is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, 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 Preferred Shares transfer books of the
Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par v alue of
the shares of capital stock of the Corporation issuable upon
exercise of one Right. If an event occurs which would require an
adjustment under both 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 any Person, alone or
together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so that
each holder of a Right (except as provided below and in Section
7(e) hereof) shall, for a period of 60 days after the later of
the occurrence of any such event or the effective date of an
appropriate registration statement under the Act pursuant to
Section 9 hereof, have a right to receive, upon exercise thereof
at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of
Common Shares (or, in the discretion of the Board of Director one
five-hundredths of a Preferred Share) as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the then number of one five-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and dividing that
product by (y) 50% of the then current per share market price of
the Corporation's Common Shares (determined pursuant to Section
11(d) hereof) on the date of such first occurrence (such number
of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not
be sufficient treasury shares or authorized but unissued (and
unreserved) Common Shares to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) and the
Rights become so exercisable (and the Board has determined not to
make the Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right
shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, (x) a number of (or fractions of) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (y) one five-hundredth of a Preferred
Share or a number of, or fractions of other equity securities of
the Corporation (or, in the discretion of the Board of Directors,
debt) which the Board of Directors of the Corporation has
determined to have the same aggregate current market value
(determined pursuant to Section 11(d)(i) and (ii) hereof, to the
extent applicable,) as one Common Share (such number of, or
fractions of, Preferred Shares, debt, or other equity securities
or debt of the Corporation being referred to as a "capital stock
equivalent"), equal in the aggregate to the number of Adjustment
Shares; provided, however, if sufficient Common Shares and/or
capital stock equivalents are unavailable, then the Corporation
shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional Common Shares
or capital stock equivalents for issuance upon exercise of the
Rights, including the calling of a meeting of stockholders; and
provided, further, that if the Corporation is unable to cause
sufficient Common Shares and/or capital stock equivalents to be
available for issuance upon exercise in full of the Rights, then
each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise at the Adjusted Purchase
Price (as such terms are hereinafter defined). As used herein,
the ter m "Adjusted Number of Shares" shall be equal to that
number of (or fractions of) Common Shares (and/or capital stock
equivalents) equal to the product of (x) the number of Adjustment
Shares and (y) a fraction, the numerator of which is the number
of Common Shares (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of which
is the aggregate number of Adjustment Shares otherwise issuable
upon exercise in full of all Rights (assuming there were a
sufficient number of Common Shares available) (such fraction
being referred to as the "Proration Factor"). The "Adjusted
Purchase Price" shall mean the product of the Purchase Price and
the Proration Factor. The Board of Directors may, but shall not
be required to, establish procedures to allocate the right to
receive Common Shares and capital stock equivalents upon exercise
of the Rights among holders of Rights.
(b) In case the Corporation shall fix a
record date for the issuance of rights (other than the Rights),
options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less than
the then current per share market price of the Preferred Shares
(as determined pursuant to Section 11(d) hereof) 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, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred 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 per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Corporation issuable upon exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash or as part of a unit, the value of such consideration or
components of a unit shall be determined in good faith by the
Board of Directors of the Corporation, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent. Preferred Shares owned by or
held for the account of the Corporation shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Corporation shall fix a
record date for the making of a distribution to all holders of
the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of
evidences of indebtedness or assets or subscription right s or
warrants (excluding those referred to in Section 11(b) hereof and
excluding cash dividends), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the then current per
share market price (as determined pursuant to Section 11(d)
hereof) of the Preferred Shares on such record date, less the
fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share
and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in
no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of
capital stock of the Corporation to be issued upon exercise of
one Right. 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.
(d) (i) For the purpose of any
computation hereunder, the "current per share market price" of
any security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the
Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration
of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. 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 Security is 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 Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by the Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the
Corporation. If on any such date no such market maker is making
a market in the Security, the fair value of the Security on such
date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange or Nasdaq
on which the Security is listed or admitted to trading or is
quoted is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange or Nasdaq, a Business Day.
(ii) For the purpose of any
computation hereunder, the "current per share market price" of
the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares
are not publicly traded, the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by five hundred. If neither
the Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board
of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one five-hundredths of a Preferred Share or one whole
share of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Final
Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder
of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Corporation other than
Preferred Shares, thereafter the number of 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 the
Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the
Corporation subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one five-hundredths of a
Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(h) The Corporation may elect on or after the
date of any adjustment of the Purchase Price to adjust the number
of Rights, in lieu of any adjustment in the number of one five-
hundredths of a Preferred Share purchasable upon the exercise of
a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one
five-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
five-hundredth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately af ter adjustment of the
Purchase Price. The Corporation 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 issued,
shall be at least ten (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(h), the Corporation 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 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the
option of the Corporation, 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
Corporation, 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 shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(i) Irrespective of any adjustment or change
in the Purchase Price or the number of one five-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one five-
hundredths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause
an adjustment reducing the Purchase Price below the then par
value, if any, of the number of one five-hundredths of a
Preferred Share, Common Shares or other securities issuable upon
exercise of the Rights, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue such
number of fully paid and non-assessable one five-hundredths of a
Preferred Share, Common Shares or other securities at such
adjusted Purchase Price.
(k) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Corporation may elect to defer until the occurrence of such event
the issuance to the holder of any Right exercised after such
record date the Preferred Shares, Common Shares or other
securities of the Corporation, if any, issuable upon such
exercise over and above the Preferred Shares, Common Shares or
other securities of the Corporation, if any, issuable upon
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Corporation shall
deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the
contrary notwithstanding, the Corporation shall be entitled to
make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that (i) any consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred
Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares,
(iv) stock dividends or (v) issuance of rights, optio ns or
warrants referred to in this Section 11, hereafter made by the
Corporation to holders of its Preferred Shares shall not be
taxable to such stockholders.
(m) The Corporation covenants and agrees that
it shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Section 11(n)
hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which does not
violate Section 11(n) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction,
or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which does not
violate Section 11(n) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or
agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Corporation and such other
Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section
11(m).
(n) The Corporation covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to, or if
at the time such action is taken it is reasonably foreseeable
that the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(o) The exercise of Rights under Section
11(a)(ii) shall only result in the loss of rights under Section
11(a)(ii) to the extent so exercised and shall not otherwise
affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13 hereof, the Corporation shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed
to have knowledge of such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.
(a) In the event that, on or following the
Shares Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into, any
Interested Stockholder or, if in such merger or consolidation all
holders of Common Stock are not treated alike, any other Person,
(y) the Corporation shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all
holders of C ommon Stock are not treated alike, any other Person,
and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a
case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities
generally entitled to vote in the election of directors ("voting
securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into securities of the surviving entity)
all of the voting securities of the Corporation or such surviving
entity outstanding immediately after such merger or consolidation
and the holders of such securities not having changed as a result
of such merger or consolidation), or (z) the Corporation shall
sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any Interested Stockholder
or Stockholders or, if in such transaction all holders of Common
Stock are not treated alike, any other Person (other than the
Corporation or any Subsidiary of the Corporation in one or more
transactions each of which does not violate Sections 11(m) or
11(n) hereof), then, and in each such case (except as provided in
Section 13(d) hereof), proper provision shall be made so that (i)
each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement and in lieu
of Preferred Shares, such number of freely tradeable Common
Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
five-hundredths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) and dividing that
product by (B) 50% of the then current per share market price of
the Common Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be
deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a
Section 13 Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any securities into which
Common Shares of the Corporation are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation
(including, if applicable, the Corporation if it is the surviving
corporation); and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the greatest portion of
the assets or earning power transferred p ursuant to such
transaction or transactions; provided, however, that in any of
the foregoing cases, (1) if the Common Shares of such Person are
not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such
other Person; (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Shares of two
or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value; and
(3) in case 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 (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Corporation shall not consummate any
such consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Corporation and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration
statement under the Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify
or register the Rights and the securities purchasable upon
exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party which
comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or con- solidations or sales or other
transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under Section
11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be applicable to
a transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a Permitted Offer
(or a wholly owned Subsidiary of any such Person or Persons);
(ii) the price per Common Share offered in such transaction is
not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of consideration offered in
such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to
issue fractions of Rights or to distribute Right Certificates
which evidence 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 last quoted
sale price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Corporation. If on any such
date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to
issue fractions of Preferred Shares (other than fractions which
are one five-hundredths or integral multiples of one five-
hundredths of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are one five-hundredth or
integral multiples of one five-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one five-
hundredths of a Preferred Share may, at the election of the
Corporation, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Corporation and a depository
selected by it; provided that such agreement shall provide that
the holders of such depository receipts shall have the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that
are not one five-hundredth or integral multiples of one five-
hundredth of a Preferred Share, the Corporation shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For the purposes of this Section 14(b), the current market value
of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 giving rise to the
right to receive Common Shares, capital stock equivalents (other
than Preferred Shares) or other securities upon the exercise of a
Right , the Corporation shall not be required to issue fractions
of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu
of fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Corporation may pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a share or
unit of such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one five-hundredths of a Preferred Share.
(d) The holder of a Right by the acceptance
of the Right expressly waives his right to receive any fractional
Rights or any fractional share upon exercise of a Right (except
as provided above).
Section 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation 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
Corporation 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 the Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f)
hereof, the Corporation 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 Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Corporation nor the
Rights Agent shall have any liability to any holder of a Right or
a beneficial interest in a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Corporation must use its
best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
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 the Preferred Shares or any other
securities of the Corporation 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 Corporation or
any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive
dividends or other distributions or to exercise any preemptive 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. The
Corporation 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 Corporation 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. The indemnity provided
for herein shall survive the expiration of the Rights and the
termination of this Agreement.
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 Preferred Shares, Common Shares or for other securities of
the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. 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 of all or substantially all of the corporate trust
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 hereof. 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 a 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 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.
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 only those duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Corporation 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 Corporation), 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 (including, without limitation,
the identity of an Acquiring Person and the determination of the
current market price of any Security) be proved or established by
the Corporation 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
any one of the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Secretary of the
Corporation and 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 on such Right Certificates) or be required
to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation 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
Corporation of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e)
hereof) or any adjustment required under the provisions of
Section 11 or Section 13 hereof 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 receipt of the certificate described in
Section 12 hereof); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any Preferred Shares, Common Shares or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares, Common Shares
or other securities will, when issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Corporation agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further
and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chief Executive
Officer, the President, any Vice President, the Chief Financial
Officer or the Secretary of the Corporation, and to apply to such
officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights
Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on or after which such action shall
be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five Business Days after the
date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the
Corporation or become pecuniarily interested in any transaction
in which the Corporation may be interested, or contract with or
lend money to the Corporation or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Corporation 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 Corporation
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) 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 not been completed,
the Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first consulting
with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days notice in
writing mailed to the Corporation and to each transfer agent of
the Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class
mail. The Corporation may remove the Rights Agent or any
successor Rights Agent upon sixty (60) days notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to 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 Corporation shall appoint a successor to
the Rights Agent. If the Corporation shall fail to make such
appointment within a period of sixty (60) days after giving
notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), 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
Corporation or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any
state of the United States in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Shares or Preferred Shares, 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 Corporation 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 Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, the
Corporation (a) shall with respect to Common Shares so issued or
sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the
Corporation, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Corporation,
issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) the Corporation shall not be obligated to issue
any such Right Certificates if, and to the extent that, the
Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate
would be issued, and (ii) no Right Certificate shall be issued
if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the
Corporation (provided such approval also includes the approval of
a majority of Disinterested Directors), may, at its option,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"), at any time prior to the earlier of (x) the occurrence
of a Section 11(a)(ii) Event, or (y) the Final Expiration Date.
The Corporation may, at its option, pay the Redemption Price
either in Common Shares, (based on the "current per share market
price," as defined in Section 11(d) hereof, of the Common Shares
at the time of redemption) or cash; provided that if the
Corporation elects to pay the Redemption Price in Common Shares,
the Corporation shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each
holder of Rights shall be rounded up to the next whole share.
(ii) In addition, the Board of
Directors of the Corporation may, at its option, at any time
following the occurrence of a Section 11(a)(ii) Event and the
expiration of any period during which the holder of Rights may
exercise the rights under Section 11(a)(ii) but prior to any
Section 13 Event redeem all but not less than all of the then
outstanding Rights at the Redemption Price (x) in connection with
any merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets or
earning power aggregating 50% or more of the assets or earning
power of the Corporation and its Subsidiaries (taken as a whole)
in which all holders of Common Shares are treated alike and not
involving (other than as a holder of Common Shares being treated
like all other such holders) an Interested Stockholder or a
Transaction Person or (y)(aa) if and for so long as the Acquiring
Person is not thereafter the Beneficial Owner of 15% of the
Common Shares, and (bb) at the time of redemption no other
Persons are Acquiring Persons.
(iii) Notwithstanding anything to the
contrary in this Agreement, including, without limitation, the
provisions of Section 23(a)(i) and (ii), in the event that a
majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or action
by written consent, and/or (ii) successors of such persons
elected to the Board of Directors for the purpose of either
facilitating a Transaction with a Transaction Person or
circumventing directly or indirectly the provisions of this Sec
tion 23(a)(iii), then (1) the Rights may not be redeemed for a
period of 180 days following the effectiveness of such election
if such redemption is reasonably likely to have the purpose or
effect of facilitating a Transaction with a Transaction Person
and (2) the Rights may not be redeemed following such 180 day
period if (x) such redemption is reasonably likely to have the
purpose of facilitating a Transaction with a Transaction Person
and (y) during such 180 day period, the Corporation enters into
any agreement, arrangement or understanding with any Transaction
Person which is reasonably likely to have the purpose or effect
of facilitating a Transaction with any Transaction Person.
(b) In the case of a redemption permitted
under Section 23(a)(i) and not prohibited by Section 23(a)(iii),
immediately upon the date for redemption set forth (or determined
in the manner specified in) in a resolution of the Board of
Directors of the Corporation ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights
Agent, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23(a)(ii) and not
prohibited by Section 23(a)(iii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the
Rights will terminate and represent only the right to receive the
Redemption Price upon the later of ten Business Days following
the giving of such notice or the expiration of any period during
which the rights under Section 11(a)(ii) may be exercised. The
Corporation shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption
set forth in a resolution of the Board of Directors ordering the
redemption of the Rights, the Corporation shall mail a notice of
redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Corporation nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23
and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
(c) The Corporation may, at its option,
discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption
of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent of the Common Shares,
and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by
the Corporation.
Section 24. Exchange.
(a) The Board of Directors of the Corporation
(provided such approval also includes the approval of a majority
of Disinterested Directors) 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 void pursuant to the provisions
of Sections 7(e) and 11(a)(ii) hereof) for Common Shares of the
Corporation at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or any
such Subsidiary, any entity holding Common Shares for or pursuant
to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common shares then outstanding.
(b) Immediately upon the action of the Board
of Directors of the Corporation ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise
such rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Corporation 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 Corporation 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 Shares
for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Sections 7(e) and 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section
24, the Corporation, at its option, may substitute Preferred
Shares (or equivalent preferred shares, as such term is defined
in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one five-
hundredth of a Preferred Share (or equivalent preferred share)
for each Common Share, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Shares pursuant
to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Common Share shall have the same voting
rights as one Common Share.
(d) In the event that there shall not be
sufficient Common Shares or Preferred Shares issued but not
outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the
Corporation shall take such action as may be necessary to
authorize additional Common Shares or Preferred Shares for
issuance upon exchange of the Rights.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall propose (i)
to pay any dividend payable in stock of any class to the holders
of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares, (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Secti on
11(n) hereof), 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 50% or more of
the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Corporation and/or any of its Subsidiaries) in
one or more transactions each of which does not violate Section
11(n) hereof, or (v) to effect the liquidation, dissolution or
winding up of the Corporation, then, in each such case, the
Corporation shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action to the extent feasible and file a certificate with the
Rights Agent to that effect, which shall specify the record date
for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Preferred 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
(20) days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares,
whichever shall be the earlier.
(b) In case of a Section 11(a)(ii) Event,
then (i) the Corporation shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph (a) to
Preferred Shares shall be deemed thereafter to refer also to
Common Shares and/or, if appropriate, other securities of the
Corporation.
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Corporation
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:
Maxicare Health Plans, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Corporation 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 Corporation) as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust
Notices or demands authorized by this Agreement to be given or
made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares 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 Corporation.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Corporation and the Rights Agent shall, if
the Corporation so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing Common Shares provided that any such
supplement or amendment must be approved by a majority of the
Disinterested Directors. From and after the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation 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 or (iv) to change or supplement the provisions
hereunder in any manner which the Corporation may deem necessary
or desirable and which shall not adversely affect the interests
of the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that 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 Corporation which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares. Notwithstanding anything
contained in this Rights Agreement to the contrary, in the event
that a majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or written
consent, and/or (ii) successors of such persons elected to the
Board of Directors for the purpose of either facilitating a
Transaction with a Transaction Person or circumventing directly
or indirectly the provisions of this Section 27, then for a
period of 180 days following the effectiveness of such action,
this Rights Agreement shall not be amended or supplemented in any
manner reasonably likely to have the purpose or effect of
facilitating a Transaction with a Transaction Person.
Section 28. Determination and Actions by the Board of
Directors, etc. The Board of Directors of the Corporation
(subject to any other specific provision of this Agreement
requiring the approval of the Disinterested Directors) shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the
Board, or the Corporation, 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, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement and whether any
proposed amendment adversely affects the interests of the holders
of Right Certificates). For all purposes of this Agreement, any
calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common
Shares or any 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) of the General Rules and
Regulations under the Exchange Act as in effect on the date of
this Agreement (except as provided in Section 1(d)). All such
actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and
binding on the Corporation, the Rights Agent, the holders of the
Right Certificates and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Right
Certificates.
Section 29. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Corporation, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each
Right 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.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
MAXICARE HEALTH PLANS, INC.
Attest:
By /s/ Xxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxxx
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Secretary Title: President
AMERICAN STOCK TRANSFER &
TRUST COMPANY
Attest:
By /s/ Xxxxx Xxxxxx By /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
Exhibit A
Certificate of Designation
of
Series B Preferred Stock
of
Maxicare Health Plans, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Maxicare Health Plans, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation") hereby certifies that the following
resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation
Law of the State of Delaware at a meeting duly called and held on
February 24, 1998.
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation in
accordance with the provisions of the Certificate of Amendment
of Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Series B Preferred Stock, with a par
value of $0.01 per share, of the Corporation and hereby states
the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof (in addition to the
provisions set forth in the Certificate of Amendment of Restated
Certificate of Incorporation which are applicable to the
Preferred Stock of all classes and series) as follows:
Section 1. Designation, Par Value and Amount. The
shares of such series shall be designated as "Series B Preferred
Stock" (hereinafter referred to as "Series B Preferred Stock"),
the shares of such series shall be with par value of $0.01 per
share, and the number of shares constituting such series shall be
500,000, provided, however, that, if more than a total of 500,000
shares of Preferred Stock shall be issuable upon the exercise of
Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of February 24, 1998 between the Corporation and
American Stock Transfer and Trust Company, as Rights Agent (as
amended from time to time) (the "Rights Agreement"), the Board of
Directors of the Corporation, pursuant to Section 151 of the
General Corporation Law of the State of Delaware, shall direct by
resolution or resolutions that a certificate be properly
executed, acknowledged and filed providing for the total number
of shares of Series B Preferred Stock authorized to be issued to
be increased (to the extent that the Certificate of Amendment of
Restated Certificate of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of the Rights.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights
of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series B Preferred
Stock with respect to dividends, the holders of shares of Series
B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of assets legally
available for the purpose, commencing after the first issuance of
a share or a fraction of a share of Series B Preferred Stock, an
amount per share (rounded to the nearest cent) equal to 500 times
the aggregate per share amount of all cash dividends, and 500
times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions declared and paid to
each share of Common Stock, par value $0.01 per share of the
Corporation (the "Common Shares') (other than a dividend payable
in shares of Common Stock or a subdivision, or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise). In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series B Preferred Stock
were entitled immediately prior to such event shall be adjusted
by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend
or distribution on the Series B Preferred Stock as provided in
paragraph (a) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable
in shares of Common Stock).
Section 3. Voting Rights. The holders of shares of
Preferred Stock shall have th e following voting rights:
(a) Except as provided in paragraph (c) of
this Section 3 and subject to the provision for adjustment
hereinafter set forth, each share of Series B Preferred Stock
shall entitle the holder thereof to 500 votes on all matters
submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which
holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein or by
law, the holders of shares of Series B Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein (or as
otherwise required by applicable law), holders of Series B
Preferred Stock shall have no general or special voting rights.
Section 4. Reacquired Shares. Any shares of Series
B Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Certificate
of Amendment of Restated Certificate of Incorporation, in any
other Certificate of Amendment creating a series of Preferred
Stock or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up.
Subject to the prior and superior rights of holders of any shares
of any series of preferred stock ranking prior and superior to
the shares of Series B Preferred Stock with respect to rights
upon liquidation, dissolution or winding up (voluntary or
otherwise), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up, including but not limited
to the Common Stock) to the Series B Preferred Stock unless,
prior thereto the holders of the Series B Preferred Stock shall
have received $100.00 per share (the "Series B Liquidation
Preference"). Following, the full amount of the Series B
Liquidation Preference, the holders of Series B Preferred Stock
and holders of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio for each share of Preferred Stock an amount 500 times
the amount distributed for each share of Common Stock.
Section 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 500
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
In t he event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Redemption.
(a) The Corporation shall have the right, at
any time, in its absolute and sole discretion to redeem all but
not less than all of Series B Preferred Stock. The Corporation
shall effect each such redemption by giving notice of its
election to redeem by at least twenty (20) days advance notice,
given by certified or registered mail, to the holder of shares of
Series B Preferred Stock at the address appearing in the
Corporation's register for the Series B Preferred Stock. The
redemption price per share of Series B Preferred Stock shall be
500 shares of Common Stock, subject to the same adjustment as
provided for in Section 3(a) hereof.
(b) The Common Stock shall be paid to the
holder of shares of Series B Preferred Stock redeemed within 30
business days of the delivery of the notice of such redemption to
such holders; provided, however, that the Corporation shall not
be obligated to deliver any portion of such Common Stock unless
either the certificates evidencing the shares of Series B
Preferred Stock redeemed are delivered to the Corporation or its
transfer agent for the Series B Preferred Stock, or the holder
notifies the Corporation or such transfer agent that such
certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation and such transfer
agent to indemnify the Corporation and such transfer agent from
any loss incurred by it in connection with such certificates.
Section 8. Ranking. The Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Chief Executive
Officer and attested by its Secretary as of the 24th day of
February, 1998.
/s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
Attest:
/s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Secretary
Exhibit B
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________________Rights
CUSIP No. _______
NOT EXERCISABLE AFTER FEBRUARY 23, 2008 OR EARLIER IF REDEEMED BY
THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Maxicare Health Plans, Inc.
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 February 24, 1998 (the "Rights Agreement"), between
Maxicare Health Plans, Inc., a Delaware corporation (the
"Corporation"), and American Stock Transfer & Trust Company, a
New York corporation (the "Rights Agent"), to purchase from the
Corporation at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on February 23, 2008, unless the Rights evidenced
hereby shall have been previously redeemed by the Corporation, at
the principal office or offices of the Rights Agent designated
for such purpose, or at the office of its successor as Rights
Agent, one five-hundredth of a fully paid non-assessable share of
Series B Preferred Stock, $0.01 par value per share (the
"Preferred Shares"), of the Corporation, at a purchase price of
$45.00 per one five-hundredth of Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of one five-hundredths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
February 24 1998, based on the Preferred Shares as constituted at
such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced
by this Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person,
Affiliate or Associate who becomes a transferee after the
Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of
any such Acquiring Person, Affiliate or Associate who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number of one five-hundredths of a Preferred Share or
other securities 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,
including Triggering Events (as such term is defined in the
Rights Agreement).
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 Corporation and the holders of
the Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal
executive offices of the Corporation and the principal office or
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities 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 Right Certificate may be redeemed by the
Corporation at a redemption price of $.01 per Right (subject to
adjustment as provided in the Rights Agreement) payable in cash.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are one five-hundredths or integral multiples of
one five-hundredths of a Preferred Share, which may, at the
election of the Corporation, be evidenced by depository
receipts), but in lieu thereof a cash payment will 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 the Preferred Shares or of any other securities of the
Corporation 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 Corporation 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
other distributions or to exercise any preemptive 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 signature of the proper officers of
the Corporation and its corporate seal. Dated as of ____________
__, ____.
[SEAL]
Attest: MAXICARE HEALTH PLANS, INC.
By By
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Secretary Title: Chief Executive
Officer
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By ______________________________
Authorized Signatory
Name:
Title:
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: _______________ __, ____
_____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of the
Medallion Signature Guarantee Program.
----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or
transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due
inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement).
_____________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate
to purchase the Preferred Shares, Common Shares or other
securities issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares, Common Shares or
other securities 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: ________________ __, ____
__________________________________
Signature
Form of Reverse Side of Right Certificate -- continued.
Signature Guaranteed:
Signatures must be guaranteed by a member of the
Medallion Signature Guarantee Program.
----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after due inquiry and to the best knowledge of
the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was
an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
_____________________________________
Signature
----------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment and
Election to Purchase and certificates must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Corporation and the Rights
Agent will deem the Beneficial Owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not
be honored.
Exhibit C
SUMMARY OF RIGHTS AGREEMENT
On February 24, 1998, the Board of Directors of Maxicare
Health Plans, Inc. (the "Corporation") declared a dividend
distribution of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.01 per
share (the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record on March 16, 1998 (the
"Record Date"), and with respect to Common Shares issued
thereafter, until the Distribution Date (as defined below) and,
in certain circumstances, with respect to Common Shares issued
after the Distribution Date. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered
holder to purchase from the Corporation one five-hundredth of a
share of Series B Preferred Stock, $0.01 par value (the
"Preferred Shares"), of the Corporation at a price of $45.00 per
one five-hundredth of a Preferred Share (the "Purchase Price") ,
subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement")
between the Corporation and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent"), dated as of
February 24, 1998.
Initially, the Rights will be attached to all
certificates representing Common Shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
separate from the Common Shares upon the earliest to occur of (i)
the date of a public announcement that, without the prior consent
of a majority of the Disinterested Directors (as defined below),
a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the
Board may determine) following the commencement or announcement
of an intention to make a tender or exchange offer, the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person". The
date that a person or group announces publicly that it has become
an Acquiring Person is the "Shares Acquisition Date". Any current
holder that has previously advised the Corporation that it holds
in excess of 15% of the Common Shares has been "grandfathered"
with respect to its current position, including an allowance for
certain small incremental additions thereto.
"Disinterested Directors" are "Continuing Directors" who
are not officers or employees of the Corporation and who are not
Acquiring Persons or their affiliates, associates or
representatives of any of them, or any person who was directly or
indirectly proposed or nominated as a director of the Corporation
by an Acquiring Person or certain related parties and "Continuing
Directors" are the members of the Board of Directors as of
February 24, 1998 or persons recommended to succeed a Continuing
Director by a majority of Continuing Directors.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender or transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights Agreement being attached
thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on February 23,
2008, unless earlier redeemed by the Corporation as described
below.
In the event that any person becomes an Acquiring Person
(except pursuant to a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms which a
majority of the Disinterested Directors determines to be adequate
and in the best interests of the Corporation and its
stockholders, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive
upon exercise Common Shares or one five-hundredth of a share of
Preferred Shares (or, in certain circumstances, other securities
of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation consolidates with, or
merges into, an Acquiring Person, or an affiliate or associate
thereof, or any person or entity in which such Acquiring Person,
affiliate or associate has an interest or which is acting in
concert with such Acquiring Person, affiliate or associate (an
"Interested Stockholder"), or any other entity (if all holders of
Common Shares are not treated alike in such transaction), (ii) an
Interested Stockholder or any other entity (if all holders of
Common Shares are not treated alike in such transaction)
consolidates with, or merges into the Corporation (other than, in
the case of either transaction described in (i) and (ii) above,
and certain reorganization transactions), or (iii) the
Corporation sells or otherwise transfers (in one transaction or a
series of transactions) 50% or more of the assets or earning
power of the Corporation to an Interested Stockholder or to any
other entity (if all holders of Common Shares are not treated
alike in such transaction), proper provision shall be made so
that each holder of a Right (except Rights which previously have
been voided as set forth below) shall thereafter have the right
(the "Flip-Over Right") to receive, upon exercise, common shares
of the acquiring or surviving company (or, in the event there is
more than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power transferred)
having a value equal to two times the exercise price of the
Right.
The Purchase Price payable, and the number of Preferred
Shares, Common Shares or other securities 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
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the Purchase Price
payable are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations
or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable, except at the election of the Corporation
for Common Shares. Each Preferred Share will be entitled to a
dividend per share of 500 times the dividend declared per Common
Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled (after the payment of any liquidation
preference on any other series of preferred stock) to $100 per
share, plus the holders of the Preferred Shares and the holders
of the Common Shares will share the remaining assets in the ratio
of 500 to 1 (as adjusted) for each Preferred Share and Common
Share so held, respectively. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive
500 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
one five-hundredths or integral multiples of one five-hundredths
of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depository receipts) and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise or if the Preferred Shares are not traded,
the market price of the Common Shares on such date.
At any time after a person becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or
more of the Common Shares, the Board of Directors of the Company
(with the approval of a majority of the Disinterested Directors)
may exchange the Rights (other than the Rights owned by the
Acquiring Person or its affiliates and associates, which shall
have become void) at an exchange ratio of one Common Share per
Right (subject to adjustment). The Board of Directors can
substitute one five-hundredths of a Preferred Share for some or
all of the Common Shares per Right.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors (with the
approval of a majority of the Disinterested Directors).
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving the
Corporation in which all holders of Common Shares are treated
alike but not involving an Acquiring Person or its affiliates or
associates and provided further that this redemption right shall
not exist for 180 days following the Shares Acquisition Date
under certain circumstances.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Corporation (with the
approval of a majority of the Disinterested Directors) prior to
the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten
or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to Form 8-A,
dated March 13, 1998. A copy of the Rights Agreement is
available free of charge from the Corporation. This summary
description of the Rights and the Preferred Shares does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement and the Exhibits thereto, which
are hereby incorporated herein by reference.
