Exhibit 10.1
FIRST AMENDMENT TO THE RIGHTS AGREEMENT
AMENDMENT made and entered into as of the first
day of October, 1996 by and between Health Systems
International, Inc. (the "Company") and Xxxxxx Trust and
Savings Bank (the "Rights Agent"), under the Rights
Agreement dated as of June 1, 1996, by and between the
Company and the Rights Agent (the "Agreement").
WHEREAS, the Company and the Rights Agent have
heretofore executed and entered into the Rights
Agreement; and
WHEREAS, pursuant to Section 27 of the Rights
Agreement, the Company may from time to time prior to the
Distribution Date (as defined therein) supplement or
amend the Rights Agreement in accordance with the
provisions of Section 27 thereof; and
WHEREAS, it is proposed that the Company enter
into an Agreement and Plan of Merger (the "Merger
Agreement"), among the Company, Foundation Health
Corporation, and FH Acquisition Corp., a wholly owned
subsidiary of the Company; and
WHEREAS, the Board of Directors of the Company
has determined that the transactions contemplated by the
Merger Agreement are fair to and in the best interests of
the Company and its stockholders; and
WHEREAS, the Board of Directors has determined
that it is in the best interests of the Company and its
stockholders to amend the Rights Agreement to exempt the
Merger Agreement and the transactions contemplated
thereby from the application of the Rights Agreement.
NOW THEREFORE, the Company and the Rights Agent
hereby amend the Rights Agreement as follows:
A. Section 1(a)(vi) of the Agreement is
hereby amended by adding the following at the beginning
of such subsection:
at all times, until the "Effective Time" as
defined in that certain Agreement and Plan of Merger,
dated October 1, 1996, among the Company, FH Acquisition
Corp. (the "Merger Sub") and Foundation Health
Corporation ("FHC") (the "Merger Agreement"),
B. Section 1(a) of the Agreement is hereby
amended by adding the following sentence at the end
thereof:
The Common Stock to be issued to and received
by stockholders of FHC pursuant to the Merger Agreement
shall be deemed to have been acquired from the Company
consistent with the terms of subsection 1(a)(v) of first
sentence of Section 1(a) and subsection (ii) of second
sentence of Section 1(a) on line 40 of Section 1(a) and
shall be subject to all other terms of this Section 1(a).
C. Section 1(b)(i) is hereby amended by
deleting the last word thereof and adding the following
at the end thereof:
for a period from the "Effective Time" (as
defined in the Merger Agreement), through the first two
years following the Effective Time for so long as Xx.
Xxxxx shall be the chief executive officer and director
of the Company, unless such determination is made by the
vote of at least eight members of the Board of Directors,
and
D. Section 30 of the Agreement is hereby
amended to add the following sentence at the end thereof:
Nothing in this Agreement shall be construed to
create or cause a Distribution Date or Stock Acquisition
Date or to constitute a Triggering Event or give any
holder of Rights or any other Person any legal or
equitable rights, remedy or claim under this Agreement in
connection with the Merger Agreement or any transactions
contemplated by the Merger Agreement.
E. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to
contracts to be made and performed entirely within such
state.
F. This Amendment may be executed in any
number of counterparts, each of which shall for all
purposes be deemed an original, and all of which together
shall constitute but one and the same instrument.
G. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise alter,
modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements
contained in the Rights Agreement, all of which are
ratified and affirmed in all respects and shall continue
in full force and affect.
IN WITNESS WHEREOF, the parties have caused
this Amendment to be duly executed as of the date first
above written.
Attest: HEALTH SYSTEMS
INTERNATIONAL, INC.
[SEAL]
By:--------------------- By:-------------------------
Name: Name:
Title: Title:
Attest: XXXXXX TRUST AND SAVINGS
BANK
[SEAL]
By:--------------------- By:-------------------------
Name: Name:
Title: Title:
