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EXHIBIT 11
FIRST AMENDMENT TO RIGHTS AGREEMENT
THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is made as of
May 7, 1997 by and among COVENTRY CORPORATION, a Tennessee corporation (the
"Company"), and CHASEMELLON SHAREHOLDER SERVICES, LLC. Reference is made herein
to that certain Rights Agreement, dated as of February 7, 1996, by and among the
parties hereto (the "Rights Agreement"). Capitalized terms not herein defined
shall have the meanings ascribed thereto in the Rights Agreement.
RECITALS
WHEREAS, pursuant to Section 7.12 of that certain Amended and Restated
Securities Purchase Agreement, of even date herewith (the "Purchase Agreement"),
among the Company, Warburg, Xxxxxx Ventures, L.P. ("Warburg") and Franklin
Capital Associates III L.P. ("Franklin") (Warburg and Franklin are hereinafter
collectively referred to as, the "Purchasers"), the execution and delivery of
this Amendment is a condition precedent to the Purchasers' obligations under the
Purchase Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement, Rights Agreement
may be amended by the parties hereto; and
WHEREAS, the parties hereto mutually desire to amend the Rights Agreement
as hereinafter set forth in order to ensure that the Purchase Agreement is
consummated by the parties thereto;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Amendment of Section 1(a). Section 1(a) of the Rights Agreement is
hereby amended and restated in its entirety as follows:
(a) "Acquiring Person" means any Person which (or which, together with all
its Affiliates and Associates) shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding. Notwithstanding the foregoing, (x)
the term "Acquiring Person" shall not include the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary with respect to such plan acting in
such capacity; and (y) no Person shall become an "Acquiring Person" as the
result of (A) the acquisition of Common Stock (or other securities convertible
into shares of Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person (alone or together with all
Affiliates and Associates) to 15% or more of the shares of Common Stock then
outstanding; provided, however, that if a Person (together with its Affiliates
and Associates) becomes the Beneficial Owner of 15% or more of the Common
such Person (or an
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Affiliate or Associate) subsequently becomes the Beneficial Owner of any
additional Common Stock, then such Person shall be deemed to be an "Acquiring
Person." Notwithstanding anything to the contrary in the Rights Agreement or the
Amendment, Warburg, Xxxxxx Ventures, L.P. (the "Purchaser") shall not be deemed
an "Acquiring Person" hereunder as a result of the transactions contemplated by
that certain Amended and Restated Securities Purchase Agreement, dated as of
April 2, 1997, by and among the Company, the Purchasers and Franklin Capital
Associates III L.P. (the "Purchase Agreement") unless and until the Purchaser
without the prior written consent of the Board of Directors of the Company (A)
shall become (or together with all its Affiliates and Associates shall become)
the Beneficial Owner of more than 30% of the shares of Common Stock outstanding
on a fully diluted basis; or (B) directly or indirectly (or any of its
Affiliates or Associates directly or indirectly), commences or participates in a
solicitation of proxies in opposition to any written proposal to shareholders by
the Company's Board of Directors or in favor of any shareholder proposal opposed
by the Company's Board of Directors, or (ii) solicits or assists any third party
to make a tender or exchange offer to purchase any shares of Common Stock or
submit any written proposal to the Board of Directors of the Company for a
merger, share exchange (other than any exercise, exchange or conversion of the
shares pursuant to the Purchase Agreement), acquisition of substantially all
assets or similar transaction involving the Company; provided, however, that the
provisions of this sentence apply only to the Purchaser and any Affiliate or
Associate of the Purchaser to whom the Purchaser may transfer the shares of
Common Stock or securities convertible into, or exercisable for, shares of
Common Stock acquired by the Purchaser.
2. Representations and Warranties of the Parties. Each of the parties
hereto hereby represents and warrants to the other party that (a) it has the
requisite power, authority and capacity to enter into this Amendment and to
consummate the transactions herein contemplated (collectively, the
"Transactions"), (b) all acts and other proceedings required to be taken by it
to authorize the execution, delivery and performance of this Amendment and the
Transactions have been duly and properly taken, and (c) this Amendment
constitutes its valid and binding obligation, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or other laws affecting the enforcement of
creditors' rights generally, or by general equitable principles.
3. Rights Agreement Otherwise Unamended. The terms of the Rights
Agreement not amended hereby shall, except as the context unambiguously
requires, remain in full force and effect.
4. Entire Agreement. This Amendment, together with the provisions of the
Rights Agreement not amended hereby, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements, whether written or oral, between the parties hereto.
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed in its respective corporate name by one of its duly authorized
officers, all as of the date first above written.
COVENTRY CORPORATION
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: President and Chief Executive Officer
CHASEMELLON SHAREHOLDER SERVICES, LLC
By: /s/Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Vice President
