PEDIATRIC SERVICES OF AMERICA, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, LLC
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 22, 1998
TABLE OF CONTENTS
Section 1. Certain Definitions................................................. 1
Section 2. Appointment of Rights Agent......................................... 8
Section 3. Issue of Rights Certificates........................................ 8
Section 4. Form of Rights Certificates......................................... 10
Section 5. Countersignature and Registration................................... 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates........................................................ 12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Right........ 13
Section 8. Cancellation and Destruction of Rights Certificates................. 15
Section 9. Reservation and Availability of Capital Stock....................... 16
Section 10. Common Stock Record Date............................................ 17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights........................................................... 18
Section 12. Certificate of Adjusted Number of Shares............................ 24
Section 13. Consolidation, Merger, Share Exchange or Sale or Transfer of Assets
or Earning Power.................................................... 25
Section 14. Fractional Rights and Fractional Shares............................. 28
Section 15. Rights of Action.................................................... 29
Section 16. Agreement of Rights Holders......................................... 29
Section 17. Rights Certificate Holder Not Deemed a Stockholder.................. 30
Section 18. Concerning the Rights Agent......................................... 31
Section 19. Merger or Consolidation or Change of Name of Rights Agent........... 31
Section 20. Duties of Rights Agent.............................................. 32
Section 21. Change of Rights Agent.............................................. 34
Section 22. Issuance of New Rights Certificates................................. 35
Section 23. Redemption and Termination.......................................... 35
Section 24. Exchange............................................................ 36
Section 25. Notice of Certain Events............................................ 37
Section 26. Notices............................................................. 38
Section 27. Supplements and Amendments.......................................... 39
Section 28. Successors.......................................................... 40
Section 29. Determinations and Actions by the Board of Directors, etc........... 40
Section 30. Benefits of this Agreement.......................................... 40
Section 31. Severability........................................................ 41
Section 32. Governing Law....................................................... 41
Section 33. Counterparts........................................................ 41
Section 34. Descriptive Headings................................................ 42
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 22, 1998 (the "Agreement"), between
PEDIATRIC SERVICES OF AMERICA, INC., a Delaware corporation (the "Company"),
and CHASEMELLON SHAREHOLDER SERVICES, LLC, a New Jersey limited liability
company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on September 22, 1998 ("the Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock, (as hereinafter
defined) of the Company outstanding at the Close of Business on October 13, 1998
(the "Record Date"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(m)
hereof) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the Distribution Date (as hereinafter defined), each right initially
representing the right to purchase ten shares of Common Stock of the Company
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, 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
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all Affiliates and Associates of such Person, shall, after the Rights Dividend
Declaration Date, become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, but shall not include the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an Acquiring Person as the result of an
acquisition of shares of Common Stock by the Company or a recapitalization
which, by reducing the number of shares of Common Stock outstanding, increases
the proportionate number of shares Beneficially Owned by such Person to 15% or
more of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company by reason of share purchases or a
recapitalization by the Company and shall, after such share purchases or
recapitalization by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company (other than as a result of a subsequent
occurrence of a Triggering Event, a stock dividend or a subdivision of the
Company Stock into a larger number of shares or a similar transaction), then
such Person shall be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if a majority of the Continuing Directors
(as defined below) or, if there are then no Continuing Directors, a majority of
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement. The
determination of whether such Person's becoming an Acquiring Person shall have
been inadvertent and the determination of whether the divestment of sufficient
shares shall have been made as promptly as practicable shall be made by a
majority of the Continuing Directors or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company.
(b) "Act" shall mean the Securities Act of 1933, as amended.
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(c) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
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of the General Rules and Regulations under the Exchange Act in effect on the
date of this Agreement.
(d) "Associate" shall mean:
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(i) any corporation or organization, or parent or subsidiary of such
corporation or organization, of which a Person is an officer, director or
partner or is, directly or indirectly, the Beneficial Owner of 10% or more
of any class of equity securities;
(ii) any trust or other estate in which a Person has a beneficial
interest of 10% or more or as to which such Person serves as trustee or in
a similar fiduciary capacity; and
(iii) any parent, brother or sister (whether by whole or half blood),
ancestor, lineal descendant or spouse of a Person, or any such relative of
such spouse.
(e) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
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to "Beneficially Own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to acquire
(whether such right or obligation is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own":
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(A) securities acquired by participation in good faith in a firm
commitment underwriting by a Person engaged in business as an
underwriter of securities until the expiration of 40 days after the
date of such acquisition; or
(B) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange;
or
(C) securities issuable upon exercise of Rights at any time
prior to the time a Person becomes an Acquiring Person (as defined in
this section); or
(D) securities issuable upon exercise of Rights from and after
the time a Person becomes an Acquiring Person which Rights were
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date (as hereinafter defined in
Section 3(a)) or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(f) hereof in connection
with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has direct or indirect "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and
(B) is not also then reportable by such Person on Schedule 13D
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 (whether or not in writing), for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
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described in the proviso to subparagraph (ii) of this paragraph (e)) or
disposing of any voting securities of the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
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day on which banking institutions in the State of Georgia are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 p.m., Atlanta
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time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., Atlanta time, on the next succeeding Business Day.
(h) "Common Stock" shall mean the common stock, par value $.01 per share,
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of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(i) "Common Stock Equivalents" shall have the meaning set forth in Section
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11(b)(ii)(C) hereof.
(j) "Continuing Director" means (i) any member of the Board of Directors of
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the Company, while such Person is a member of the Board of Directors of the
Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person or a representative, designee or nominee of an Acquiring Person
or of any such Affiliate or Associate, and who was a member of the Board of
Directors of the Company on the date of this Agreement, and (ii) any Person who
becomes a member of the Board of Directors of the Company after the date of this
Agreement, while such Person is a member of the Board of Directors of the
Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative, designee or nominee of an Acquiring
Person or of any such Affiliate or Associate, if such Person's nomination for
election, or election, to the Board of Directors of the Company is recommended
or approved by a majority of the Continuing Directors.
(k) "Current Market Price" per share of Common Stock on any date shall mean
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the average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made pursuant to Section
11(a) hereof, the Current Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the ten consecutive Trading Days immediately following such
date; provided, however, that in the event that the Current Market Price per
share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of:
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(i) a dividend or distribution on such Common Stock payable in shares
of such Common Stock or securities convertible into shares of such Common
Stock (other than the Rights); or
(ii) any subdivision, combination or reclassification of such Common
Stock,and prior to the expiration of the requisite 30 Trading Day or ten
Trading Day period, as set forth above, 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 Market Price shall be properly adjusted
to take into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the 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 National Association
of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or such other
system then in use, or, if on any such date the shares of Common Stock 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 Common Stock
selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held
or not so listed or traded, Current Market Price per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(l) "Distribution Date" shall have the meaning set forth in Section 3(a)
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hereof.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
(n) "Exempt Person" shall mean the Company, any Subsidiary (as such term is
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hereinafter defined) of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any entity or trustee holding Common Stock
for or pursuant to the terms of any such plan or for the purpose of funding any
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such plan or funding other employee benefits for employees of the Company or of
any Subsidiary of the Company.
(o) "Expiration Date" shall mean the earlier of the time at which the
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Rights are redeemed as provided in Section 23 hereof or the "Final Expiration
Date" (as hereinafter defined in this section).
(p) "Final Expiration Date" shall mean the Close of Business on September
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30, 2008.
(q) "Person" shall mean any individual, firm, corporation, partnership,
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limited partnership, joint venture, trust, limited liability company, or other
entity, organization or association, and shall include any "group" as that term
is used in Rule 13d-5(b) under the Exchange Act.
(r) "Preferred Stock" shall mean the presently authorized but unissued
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preferred shares of the Company, having the rights and preferences to be
determined by the Board of Directors, as set forth in Article Fourth of the
Amended and Restated Certificate of Incorporation of the Company.
(s) "Principal Party" shall mean
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(i) in the case of any transaction described in clauses (i) or (ii)
of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger,
consolidation, or share exchange and if no securities are so issued, the
Person that is the other party to such merger, consolidation, or share
exchange, or, if there is more than one such Person, the Person the shares
of Common Stock of which have the greatest aggregate market value of shares
outstanding, or if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger (including
the Company if it survives) or the Person resulting from the consolidation;
and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions, or if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets
or earning power cannot be determined, whichever of such persons that is
the issuer of Common Stock having the greatest aggregate market value of
shares outstanding; provided, however, that in any such case,
(A) if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12 month period
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registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to
such other Person; and
(B) in case such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Stocks 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 Stock having the
greatest aggregate market value of shares outstanding; and
(C) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (A) and
(B) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a subsidiary
of both or all of such joint venturers, and the Principal Party in
each case shall bear the obligation set forth in Section 13 in the
same ratio as its interest in such Person bears to the total of such
interests.
(t) "Purchase Price" shall have the meaning set forth in Section 11(a)(ii)
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hereof.
(u) "Redemption Price" shall have the meaning set forth in Section 23(a)
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hereof.
(v) "Rights Certificates" shall have the meaning set forth in Section 3(a)
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hereof.
(w) "Section 11(a)(ii) Event" shall be deemed to have occurred upon any
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Person becoming an Acquiring Person.
(x) "Section 13 Event" shall mean any event described in clauses (i), (ii)
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or (iii) of Section 13(a) hereof,
(y) "Spread" shall have the meaning set forth in Section 11(b)(i) hereof.
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(z) "Stock Acquisition Date" shall mean the earlier of the first date of
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public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(aa) "Subsidiary" shall mean, with reference to any Person, any
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corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is Beneficially Owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(bb) "Summary of Rights" shall have the meaning set forth in Section 3(b)
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hereof.
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(cc) "Substitution Period" shall have the meaning set forth in Section
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11(b) hereof.
(dd) "Trading Day" shall have the meaning set forth in Section 1(k) hereof.
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(ee) "Triggering Event" shall mean any Section 11(a)(ii) Event, or any
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Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date),
or
(ii) the Close of Business on the tenth Business Day after the date
that a tender or exchange offer by any Person (other than an Exempt Person)
is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding (the earliest of (i)
and (ii) being herein referred to as the "Distribution Date"),
(A) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and
(B) the Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a
transfer to the Company).
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A majority of the Continuing Directors or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company may defer the
date set forth in clause (ii) of the preceding sentence to a specified later
date or to an unspecified later date to be determined by a subsequent action or
event. As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section
11(f) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section
1(o) hereof), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed 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 the Rights Agreement between PEDIATRIC SERVICES OF
AMERICA, INC. (the "Company") and ChaseMellon Shareholder Services, LLC
(the "Rights Agent") dated as of September 22, 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 offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
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therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person, or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), 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
earlier of:
(i) the Distribution Date or
(ii) the Expiration Date,
the Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of Common
Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit A hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or of
Nasdaq or other system then in use, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of shares of Common
Stock as shall be set forth therein at the price determined in accordance with
Section 11(a)(ii) hereof (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 Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights Beneficially Owned by any Person known to be:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person;
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such; or
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(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either:
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights; or
(B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend, modified as applicable to such Person:
The Rights represented by this Rights 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 Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of such Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either manually
or by facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
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(b) 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 Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) 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 Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled 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 Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or 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 Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the Certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
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
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
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tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights 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 Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(b) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights 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 with respect to
the total number of shares (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the Expiration Date.
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall be determined in the manner provided in Section
11(a)(ii) and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per share of Common Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section
20(j) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of
Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number
of shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or
(B) if the Company shall have elected to deposit the total
number of shares of Common Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of
shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary
agent to comply with such request,
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(ii) [Reserved.]
(iii) requisition from the Company the amount of other securities,
cash or assets to be paid in lieu of shares of Common Stock pursuant to an
adjustment required under Section 11(b) hereof,
(iv) after receipt of such certificates, depositary receipts, other
securities, cash or assets, cause the same to be delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and
(v) after receipt thereof, deliver such cash, if any, to, or upon
the order of, the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(b) hereof) shall be made in cash or by certified bank check, bank
draft or money order payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(b) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Triggering Event, any Rights Beneficially Owned
by:
(i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person;
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such; or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either:
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
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continuing agreement, arrangement or understanding regarding the
transferred Rights; or
(B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect 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 Company shall use all
reasonable efforts to insure 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 Rights 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 Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or 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
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
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SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) To the extent required by applicable law, the Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock (and, following the occurrence of
a Triggering Event, out of its other securities or out of its authorized and
issued shares held in its treasury), the number of shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) that, as
provided in this Agreement including Section 11(b) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the occurrence of
a Triggering Event, other securities) issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange or Nasdaq or
other system then in use, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all securities reserved
for such issuance to be listed on such exchange or Nasdaq or other system then
in use upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earliest date after
the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section 11(b) hereof, or as soon as
is required by law following the Distribution Date, as the case may be, 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) until the
earlier of:
(A) the date as of which the Rights are no longer exercisable
for such securities, and
(B) the date of the expiration of the Rights.
The Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 120 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
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Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and, if
necessary, until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Common Stock (and, following
the occurrence of a Triggering Event, other securities) 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.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of shares of Common Stock (or other securities,
as the case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of shares of Common Stock (or other securities,
as the case may be) in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for a number of shares of Common Stock (or
any other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for a number of shares of Common
Stock (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
such shares of Common Stock (or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Common Stock (or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Stock (or other
securities, as the case may be) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the Company
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with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER 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 that, at any time after the Close of Business on
the Distribution Date and prior to the Close of Business on the Expiration
Date, the Company shall:
(A) declare or pay a dividend on the Common Stock payable in
shares of Common Stock,
(B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
(D) issue any shares of its capital stock in a reclassification
of its Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof,
then and in such event, the number of shares of Common Stock, the number
and kind of shares of Preferred Stock, other securities or property, as the
case may be, issuable upon the exercise of a Right on such date shall be
proportionately adjusted so that the holder of any Right exercised on or
after such date shall be entitled to receive, upon the exercise thereof and
payment of the Exercise Price, the aggregate number of shares of Common
Stock, the number and kind of shares of Preferred Stock, other securities
or property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was
exercisable and the transfer books of the Company were open, such holder
would have owned upon such exercise and would have been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
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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) hereof.
(ii) In the event that any Person (other than the Company, any
Subsidiary of the Company, any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company as of the Rights Dividend
Declaration Date, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
alone or together with its Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date, become an Acquiring Person,
then, promptly following the occurrence of each such Section 11(a)(ii)
event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof, a number of shares of Common
Stock equal to ten shares of Common Stock multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding on
the Stock Acquisition Date, and the denominator of which is the number of
Rights outstanding on the Stock Acquisition Date that are not Beneficially
Owned by the Acquiring Person or its Affiliates or Associates. The price
(which following such first occurrence, shall thereafter be referred to as
the "Purchase Price") for the exercise of each Right shall be equal to the
product of (x) 20% of the then Current Market Price per share of the Common
Stock (determined pursuant to Section 1(k) on the Stock Acquisition Date),
multiplied by (y) the number of shares of Common Stock to be received upon
exercise, as set out in this subparagraph.
(b) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall:
(i) determine the excess of
(A) the Current Market Price of the Shares of Common Stock
issuable upon the exercise of a Right over
(B) the Purchase Price (such excess, the "Spread"), and
(ii) with respect to each Right (other than Rights which have become
void pursuant to Section 7(e) hereof), make adequate provision to
substitute for the Shares, upon payment of the applicable Purchase Price,
(A) cash,
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(B) a reduction in the Purchase Price,
(C) Preferred Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors of the Company has deemed
to have substantially the same value as shares of Common Stock (such
shares of preferred stock to be referred to as "Common Stock
Equivalents")),
(D) debt securities of the Company,
(E) other assets, or
(F) any combination of the foregoing,
having an aggregate value, when added to the value of the shares of Common
Stock actually issued upon exercise of such right, equal to the Current
Market Price (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (ii) above within 30 days following the Section
11(a)(ii) Event, then the Company shall be obligated to deliver, to the
extent permitted by applicable law and any material agreements in effect to
which the Company is a party, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above may be
extended to the extent necessary, but not more than 90 days after the
Section 11(a)(ii) Event, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period, as
it may be extended, the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(b)(ii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence
and to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
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For purposes of this Section 11(b)(ii), the value of the shares of Common
Stock shall be the Current Market Price (as determined pursuant to Section
1(k) hereof) per share of the Common Stock on the date of the Section
11(a)(ii) Event and the value per share or fractional value of any Common
Stock Equivalent shall be deemed to have the same value as the Common Stock
on such date. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive shares
of Common Stock upon the exercise of the Rights among the holders of the
Rights pursuant to this Section 11(b)(ii).
(c) Anything herein to the contrary notwithstanding, no adjustment in the
number of shares of Common Stock purchasable upon exercise of a Right pursuant
to Section 11(a)(ii) hereof or in the Purchase Price or Spread pursuant to
Section 11(b) hereof shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the aggregate number of
shares or in the Spread or Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(c) are not required to be made
shall be carried forward and taken into account in any subsequent adjustments.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest one-hundredth of a share of Common Stock. Notwithstanding the first
sentence of this Section 11(c), 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 Expiration Date.
(d) If as a result of an adjustment made pursuant to Section 11(b) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof 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 Common Stock contained in Sections 11(a), (b),
(c), (e), (f), (i) and (j), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Common Stock shall apply on like terms to any such
other shares.
(e) All Rights originally issued by the Company subsequent to any
adjustment made to the number of shares of Common Stock purchasable upon
exercise of a Right pursuant to Section 11(a)(ii) hereof shall evidence the
right to purchase the number of shares of Common Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(f) The Company may elect on or after the date of any adjustment of the
number of shares of Common Stock purchasable upon exercise of a Right pursuant
to Section 11(a)(ii) hereof to adjust the number of Rights, in lieu of any
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adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. The aggregate of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Common Stock
for which the aggregate of the Rights was exercisable immediately prior to such
adjustment. Adjustments in Rights shall be calculated to the nearest one-
hundredth of a Right. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the number of shares of Common Stock
purchasable upon exercise is adjusted or any day thereafter, but if the Rights
Certificates have been issued the record date shall be at least ten days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(f), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights 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 Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted number of
shares of Common Stock purchasable upon exercise of a Right) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(g) Irrespective of any adjustment or change in the number of shares of
Common Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the number of shares
which were expressed in the initial Rights Certificates issued hereunder.
(h) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Stock or other
shares of Common Stock Equivalents issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock or Common Stock Equivalents
at such adjusted Purchase Price. In the event that it appears that the issuance
of shares of Common Stock at the Purchase Price called for herein would result
in issuance of shares of Common Stock that were not validly issued fully paid
and nonassessable shares of Common Stock, the Company may issue Common Stock
Equivalents in the manner provided in Section 11(b)(ii)(C) hereof.
(i) In any case in which this Section 11 shall require that an
adjustment in the number of shares of Common Stock or other capital stock or
securities of the Company, if any, issuable upon exercise of the Rights shall be
made effective as of a record date for a specified event, the Company may elect
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to defer until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of shares of Common Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the number of shares of Common Stock purchasable upon exercise of a
Right in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(j) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price or
number of shares of Common Stock purchasable upon exercise of a Right, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their judgment the Board of Directors of the Company shall
determine to be advisable in order that any
(i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at less
than the Current Market Price,
(iii) issuance wholly for cash of shares of preferred stock or other
securities which by their terms are convertible into or exchangeable for
shares of Common Stock,
(iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11,
hereafter made by the Company to holders of its Common Stock shall not be
taxable to such stockholders.
(k) The Company covenants and agrees that it shall not, at any time after
the Distribution Date,
(i) consolidate with any other Person,
(ii) merge with or into any other Person,
(iii) engage in a share exchange with any other Person, or
(iv) sell or transfer (or permit any Subsidiary to sell or transfer),
in one transaction, or a series of related transactions, assets or earning
-23-
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons, if
(A) at the time of or immediately after such consolidation,
merger, share exchange, sale or transfer, there are any rights,
warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or
(B) prior to, simultaneously with or immediately after such
consolidation, merger, share exchange, sale or transfer, 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.
(l) The Company 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 if at any time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(m) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date
(i) declare or pay any dividend on the outstanding shares of Common
Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares,
then in any such case the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall remain unchanged, so that the value of the rights
remaining shall represent the same proportion of the value of the Company as
before. Rights associated with shares eliminated by any combination of
outstanding shares of Common Stock shall be canceled by operation of such
combination.
SECTION 12. CERTIFICATE OF ADJUSTED NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall promptly
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(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 Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) 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
any adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER, SHARE EXCHANGE OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with and into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(ii) any Person shall consolidate with, or merge with or into, the
Company, or engage in a share exchange with the Company, and the Company
shall be the continuing or surviving corporation of such consolidation,
merger or share exchange and, in connection with such consolidation, merger
or share exchange, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any
other Person (or of the Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons,
then, and in each such case, promptly following the occurrence of each such
Section 13 Event, proper provision shall be made so that:
(iv) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
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thereof at the then current Purchase Price, based on the Current Market
Price of the Common Stock of the Company as of the last Business Day prior
to the first public announcement of such Section 13 Event, in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party, not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
product of ten times the result obtained by dividing the Current Market
Price of a share of Common Stock by the Current Market Price of a share of
Common Stock of the Principal Party multiplied by a fraction the numerator
of which is the number of shares of Common Stock outstanding on the Stock
Acquisition Date, and the denominator of which is the number of Rights
outstanding on the Stock Acquisition Date that are not Beneficially Owned
by the Acquiring Person or its Affiliates or Associates, provided,
however, that the Purchase price and the number of shares of Common Stock
of such Principal Party issuable upon the exercise of each Right shall be
further adjusted as provided in Section 11(d) of this Agreement to reflect
any events occurring in respect of such Principal Party after the date of
such Section 13 Event;
(v) 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 Company pursuant to this Agreement;
(vi) the term "Company" 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;
(vii) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with Section 9 hereof) 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 its shares of Common Stock thereafter deliverable
upon the exercise of the Rights, provided that, upon the subsequent
occurrence of any merger, consolidation, share exchange, sale or transfer
of assets or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
Exercise of a Right and payment of the Purchase Price as provided in this
Section 13(a), such cash, shares, rights, dividends, warrants and other
property which such holder would have been entitled to receive had such
holder, at the time of such transaction, owned the Common Stock of the
Principal Party receivable upon the exercise of a Right pursuant to this
Section 13(a); and
(viii) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event, except as
they apply to determination of the Purchase Price.
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(b) The Company shall not consummate any such consolidation, merger, share
exchange, sale or transfer unless prior thereto the Company and the Principal
Party shall have exercised and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) hereof shall promptly
be performed in accordance with their terms, that the Principal Party has a
sufficient number of authorized shares of its Common Stock 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 Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraph (a) of
this Section 13 and further providing that, as soon as practicable after the
date of any consolidation, merger, share exchange or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will
(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;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on any national securities
exchange or Nasdaq, to list or admit to trading (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights
on such securities exchange or Nasdaq, of, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on any such
national securities exchange or Nasdaq, to cause the Rights and the
securities receivable upon exercise of the Rights to be reported by such
other system then in use;
(iv) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act; and
(v) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.
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(c) The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, share exchanges or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate or articles of incorporation or bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of
(i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then Current Market Price per share thereof (determined pursuant to Section
1(k) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Current Market Price,
or
(ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13,
then, in such event, the Company hereby agrees with each holder of Rights that
it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after a
Person first becomes an Acquiring Person, enter into any transaction of the type
contemplated by (i) - (iii) of Section 13(a) hereof if (x) at the time of or
immediately after such consolidation, merger, share exchange, sale, transfer or
other transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, share exchange, sale, transfer or other transaction, 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 or Associates or
(z) the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
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SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights 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 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 of the Rights 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 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 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 Company. 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 Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
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 share of
Common Stock. For purposes of this Section 14(b), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 1(k) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action given to the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
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of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), in his own behalf and for his own benefit, may enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate (or, prior to the Distribution Date, such
Common Stock) in the manner provided in such Rights 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
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
agency of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to 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 Company nor the Rights Agent shall have any liability to any holder of 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 Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
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SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
shares of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Rights
or Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay in a timely manner 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 disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any losses, expenses, claims, damages or liabilities,
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 and performance
hereunder, including, without limitation, the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly, and
will promptly reimburse the Rights Agent for any legal or other expenses
reasonably incurred in investigating or defending any such loss, expense, claim,
damage or liability.
(b) The Rights Agent shall be protected by the indemnity provided by this
Section 18 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 Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons or otherwise upon the advice of
counsel as set forth in Section 20 of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
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(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, 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 Rights 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
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, the President, the Chief Executive Officer,
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any Vice President, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Assistant Secretary of the Company 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 to the Company and any
other Person only for a loss which is a result of or caused by its own gross
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 maintained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity or legality 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 legality or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for 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 Rights Certificates after receipt of the
certificate described in Section 12 hereof setting forth any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or 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
Person reasonably believed by the Rights Agent to be one of the Chairman of the
Board, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer or Controller of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable to the Company or the holder of any Rights
Certificate or any stockholder of the Company for any action taken or suffered
to be taken by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any
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application by the Rights Agent for written instructions from the Company 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 Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable in accordance with a proposal included in 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 Company
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 case of an omission), the Rights Agent shall have received
written instructions 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 Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed to certify or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the
Company.
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 30 days' notice in writing mailed to
the Company, and to each transfer agent of the Common Stock, by registered or
certified mail, and, following the Distribution Date, to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 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 Stock, by registered or certified mail, and,
following the Distribution Date, to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
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notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a corporation described in clause (a) of this sentence. 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 Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and,
following the Distribution Date, mail a notice thereof in writing to the
registered holders of the Rights 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 RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights 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 or the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the earlier of the redemption or
expiration of the Rights, the Company:
(a) may, with respect to shares of Common Stock 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 hereinafter issued by
the Company, or upon a contractual obligation of the Company in each case
existing prior to the Distribution Date, and
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(b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that
(i) no such Rights Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustments shall otherwise have been made in lieu of the
issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the time any Person first becomes an Acquiring Person, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$.01 per Right (the "Redemption Price"), as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to Paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears 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 Stock. 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. The failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption.
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
after any person first 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 Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right
-36-
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Not withstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after (i) any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding or (ii) the occurrence of an event specified in
Section 13(a) hereof.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further notice, the right to exercise such Rights shall
terminate and the only right thereafter a holder of such Rights shall have shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall promptly mail a notice of any such exchange to
all of the holders of the Rights so exchanged 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 shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, or that any
regulatory actions or approvals are necessary in connection therewith, the
Company may, in its discretion, take such actions or seek such approvals as may
be necessary to authorize additional shares of Common stock for issuance upon
exchange of the Rights. In the event that the Company shall, after good faith
effort, be unable to take such actions or obtain such approvals as may be
necessary to authorize such additional shares of Common Stock, the Company shall
substitute, to the extent of such insufficiency, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of units of
Common Stock Equivalents as defined in Section 11(b)(ii) hereof, cash or other
assets of the Company equal to the Current Market Price of one share of Common
Stock (determined pursuant to Section 1(k) hereof) as of the date of issuance of
such Common Stock Equivalents or fractions thereof.
(d) The Company shall not, in connection with any exchange pursuant to
this Section 24, be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
-37-
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 1(k) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders
of the Common Stock, or
(ii) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock), or
(iv) to effect any liquidation, dissolution or winding up of the
Company,
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants,
reclassification or the date on which such liquidation, dissolution or winding
up is to take place and the date of participation therein by the holders of the
shares of Common Stock, 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 20 days prior to the record date for determining holders of the shares of
Common Stock 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
shares of Common Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) or Section
13 hereof shall occur, then, in any such case, the Company shall, as soon as
practicable thereafter, give to each holder of a Rights Certificate (or if
occurring prior to the Distribution Date, the holders of the Common Stock), to
the extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Sections 11(a)(ii) and 13 hereof.
SECTION 26. NOTICES.
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Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Pediatric Services of America, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, LLC
0 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Administration Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company, in the case of Rights
represented by certificates for Common Stock, and on the registry books of the
Rights Agent, in the case of Rights represented by Rights Certificates.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
Subject to the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of the holders
of the Rights. At any time when the Rights are no longer redeemable, and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of Rights Certificates in
order
(c) to cure any ambiguity,
-39-
(d) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein,
(e) to shorten or lengthen any time period hereunder, or
(f) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person, or an Affiliate or Associate of any such Acquiring Person); provided,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (e) of this sentence,
(i) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or
(ii) 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 the Rights.
Upon the delivery of a certificate that is signed by an appropriate officer of
the Company 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. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
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. The Board of Directors of the Company (or, where
specifically provided for herein, certain specified members thereof) shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board or to the Company, or as
-40-
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to
(a) interpret the provisions of this Agreement, and
(b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, but not limited to, a determination
to redeem or not redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (c) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, where specifically provided for herein,
by certain specified members thereof) in good faith, shall
(c) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and
(d) not subject the Board or such specified members thereof to any
liability to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
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; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business of the twentieth day following the
date of such determination by the Board of Directors.
-41-
SECTION 32. GOVERNING LAW.
This Agreement, each Right and each Rights 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 to be 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.
-42-
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 their respective corporate seals to be hereunto affixed and
attested, all as of the date and year first above written.
Attest: PEDIATRIC SERVICES OF AMERICA, INC.
By:_________________________________ By:____________________________________
Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
Senior Vice President, Chief Chairman of the Board, President and
Financial Officer, Secretary and Chief Executive Officer
Treasurer
Attest: CHASEMELLON SHAREHOLDER SERVICES, LLC
By:_________________________________ By:____________________________________
Name:_______________________________ Name: Xxxxx Xxxxxxxx
Title:______________________________ Title: Vice President
-43-
EXHIBIT A
[Form of Rights Certificate]
Certificate No. ____ _____ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2008 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS 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 RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
Pediatric Services of America, Inc.
This certifies that ________________________________, or registered
assigns, is the registered owner of the number of Rights set forth set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of September 22,
1998 (the "Rights Agreement"), between Pediatric Services of America, Inc., a
Delaware corporation (the "Company"), and _______________, a national banking
association (the "Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (Atlanta, Georgia time) on September 30, 2008 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, a number of shares of Common Stock (the "Common Stock") of the
Company equal to ten shares of Common Stock multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding on the
Stock Acquisition Date, and the denominator of which is the number of Rights
outstanding on the Stock Acquisition Date that are not beneficially owned by an
Acquiring Person or its Affiliates or Associates, at a purchase price per share
equal to twenty percent (20%) of the Current Market Price on the Stock
Acquisition Date (the "Purchase Price"), as those terms are defined in Section 1
of the Rights Agreement, upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The Purchase Price may be paid in cash or by certified bank check or
money order payable to the Company. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of __________________________, based
upon the Common Stock as constituted at such date.
These rights shall only become exercisable 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 Certificate are beneficially owned by a person other than (i)
an Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, an Affiliate or Associate of any such
Person. If the Rights are beneficially owned by any of the Persons specified in
clauses (i), (ii) or (iii) of the preceding sentence, 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 and
kind of shares of Common Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights 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 Rights 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 this reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights 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 above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier of the close of
business on (i) the time any Person first becomes an Acquiring Person, and (ii)
the Final Expiration Date.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
-2-
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights 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 Company and
its corporate seal.
Dated as of
--------------------
PEDIATRIC SERVICES OF AMERICA, INC.
ATTEST:
By: By:
-------------------------- --------------------------------------
Name: Name:
------------------------- ------------------------------------
Title: Title:
------------------------ ------------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, LLC
ATTEST:
By: By:
---------------------------- ---------------------------------------
Name: Name:
------------------------- ------------------------------------
Title: Title:
------------------------ -----------------------------------
-3-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED, ___________________________________________ hereby sells,
assigns and transfers unto ___________________________________________________
(Please print name and address of transferee)
______________________________________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _________________________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
-----------------------
----------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person, an Affiliate or
Associate of any such Person.
Dated:
---------------------- ---------------------------
Signature
Signature Guaranteed:
-4-
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
-5-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights Represented by the Rights
Certificate)
To: PEDIATRIC SERVICES OF AMERICA, INC.
The undersigned hereby irrevocably elects to exercise _____ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
--------------------------------------------------------------
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
Rights Certificate, a new Rights Certificate for the balance 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
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person,
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
-6-
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person, an Affiliate or
Associate of any such Person.
Dated:
------------------------
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person as applicable, and shall
replace the preceding sentence.
-7-
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On September 22, 1998, the Board of Directors of Pediatric Services of
America, Inc. (the "Company") declared a dividend distribution of one Right for
each outstanding share of Company Common Stock (the "Common Stock") to
stockholders of record at the close of business on October 13, 1998. Each Right
initially entitles the registered holder to purchase from the Company a number
of shares of Common Stock equal to ten shares of Common Stock multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding on the Stock Acquisition Date, and the denominator of which is the
number of Rights outstanding on the Stock Acquisition Date that are not
beneficially owned by an Acquiring Person or its Affiliates or Associates, at a
Purchase Price per share of 20% of Current Market Value, measured as of the date
that an announcement is made that a person has acquired sufficient shares to
become an Acquiring Person (15%). The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, LLC, as Rights Agent.
Initially, the Rights will be attached to all Common Stock Certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a public
announcement that a person or a group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding shares of Common
Stock of the Company (an "Acquiring Person") or (ii) 10 days following the
commencement of a tender offer or an exchange offer that would result in a
person or group beneficially owning 15% or more of such outstanding shares of
Common Stock. In certain circumstances, the Distribution Date may be deferred
by the Board of Directors. Certain inadvertent acquisitions will not result in
a person becoming an Acquiring Person if the person promptly divests itself of
sufficient Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred only with such Common Stock
certificates, (ii) new Common Stock Certificates issued after October 13, 1998
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on September 30, 2008, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
If at any time following the Distribution Date a Person becomes the owner
of more than 15% of the then outstanding shares of Common Stock, each holder of
a Right will thereafter have the right to receive, upon exercise, a number of
shares of Common Stock equal to ten shares of Common Stock multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding on the Stock Acquisition Date, and the denominator of which is the
number of Rights outstanding on the Stock Acquisition Date that are not
Beneficially Owned by the Acquiring Person or its Affiliates or Associates. The
price for the exercise of each Right shall be equal to the product of (x) 20% of
the then Current Market Price of the Common Stock on the Stock Acquisition Date,
multiplied by (y) the number of shares of Common Stock to be received upon
exercise. For example, if the Current Market Value of a share of Common Stock
were $5.00 at the Stock Acquisition Date, and if the Acquiring Person owned 50%
of the then outstanding Common Stock when the Rights became exercisable, the
exercise price would be $20.00, and the number of shares purchasable with each
right would be 20.
Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination in which the
Company is not the surviving corporation, or (ii) all of its shares are acquired
in a share exchange or the Company engages in a merger or consolidation in which
all or part of its outstanding shares of Common Stock are changed into or
exchanged for stock, other securities or assets of any other person or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, a number of
shares of common stock of the acquiring company equal to the product of ten
times the result obtained by dividing the current market price of the Company's
Common Stock by the current market price of the common stock of the acquiring
corporation or, if such stock is not traded in public markets, of its parent
-2-
corporation. The purchase price will be calculated on the same basis as if the
Right holder were exercising a Right to purchase Common Stock of the Company at
that time.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Rights will be issued, and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Rights on the last trading
date prior to the date of adjustment. No fractional shares will be issued upon
exercise of the Rights, and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Common Stock on the last trading date prior to
the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right, at any time before a Person becomes an Acquiring
Person. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The provisions of the Rights Agreement may be amended by the Board of
Directors prior to the time a Person becomes an Acquiring Person. After such
date, the provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any time period under
the Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
As of the close of business on September 30, 1998, there were 6,651,964
shares of Common Stock of the Company outstanding, and 0 shares of Common Stock
of the Company in the treasury. As of September 30, 1998, options to purchase
1,034,117 shares of Common Stock were outstanding.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner which causes the Rights to become exercisable, unless the terms of
an offer for all shares are first approved by the Board and the Rights Agreement
amended to permit the transaction or the Rights redeemed by the Company. The
Rights, however, should not affect any prospective offeror willing to make an
offer at a fair price and otherwise in the best interests of the Company and its
stockholders, as determined by the Board, or willing to negotiate with the
Board. The Rights should not interfere with any merger or other business
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combination approved by the Board since the Board may, at its option, before the
merger or business combination, amend the Rights Agreement to permit the
transaction or redeem all, but not less than all, of the then-outstanding Rights
at the redemption price.
In addition, certain provisions of the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and Amended and
Restated Bylaws (the "Bylaws") may have anti-takeover effects. For example,
Article Eight of the Certificate of Incorporation provides that members of the
Board of Directors are elected for three year staggered terms, which will make
it difficult for a hostile acquiror to gain immediate control of the Board of
Directors. Directors elected to staggered terms may only be removed by the
stockholders for cause. In addition, Article Four of the Certificate of
Incorporation grants authority to the Board of Directors of the Company to issue
preferred stock and to fix the designation, powers, preferences and any special
rights of any series of such preferred stock, and the qualifications,
limitations and restrictions of that series. Article II of the Bylaws provides
that stockholders must give not less than 60 nor more than 90 days' advance
notice of any matter the stockholders intend to raise at any annual stockholder
meeting.
Certain provisions of the Delaware General Corporation Law (the "Delaware
Code"), to which the Company is subject, also may have the effect of preventing
a change in control of the Company or in making changes in management more
difficult. Section 203 of the Delaware Code, for example, requires that certain
business combinations between the Company and certain "interested stockholders"
(as defined in Section 203) must satisfy certain conditions unless (i) prior to
the date of a business combination the Board of Directors of the Company
approves the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the Company
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding, the shares owned by persons who
are directors and also officers and employee stock plans of the Company in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or subsequent to the date the stockholder becomes an interested
stockholder, the business combination is approved by the Board of Directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock that is not owned by
the interested stockholder.
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