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EXHIBIT 4.1
RIGHTS AGREEMENT
DATED FEBRUARY 6, 1997
BETWEEN
HORIZON MENTAL HEALTH MANAGEMENT, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
RIGHTS AGENT
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TABLE OF CONTENTS
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . 7
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Reservation and Availability of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Common Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11. Adjustment of Exercise Price, Number and Kind of Shares
or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12. Certificate of Adjusted Exercise Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . 17
Section 13. Merger, Consolidation or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . 18
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 19. Merger or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 28. Determinations and Actions by the Board of Directors, etc. . . . . . . . . . . . . . . . . . . . . . 31
Section 29. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A Form of Rights Certificate
Exhibit B Summary of Rights Agreement
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of the 6th day of February, 1997 (the
"Agreement"), between Horizon Mental Health Management, Inc., a Delaware
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent").
WHEREAS, subject to the execution of this Agreement and to certain
other conditions, on January 29, 1997 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company (the "Board") or its designee authorized
and declared a distribution of one Common Stock purchase right (a "Right") for
each share of common stock, $0.01 par value ("Common Stock"), of the Company
outstanding on February 19, 1997 (the "Record Date"), to be distributed on
March 4, 1997 (the "Distribution Date") and the issuance of one Right for each
share of Common Stock issued between the Record Date and the earlier of the
Exercisability Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one share of
Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. The following terms have
the meanings indicated:
(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 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, proportionately
increases the percentage 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 Stock then outstanding as a result of share purchases by the
Company, and such Person (or an Affiliate or Associate) subsequently becomes
the Beneficial Owner of any additional Common Stock, such Person shall then be
an "Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be a "Acquiring Person" has become such inadvertently, and such
Person divests as promptly as practicable the sufficient number of shares of
Common Stock so that such Person is no longer be a "Acquiring Person," then
such Person shall not be deemed an "Acquiring Person" for purposes of this
Agreement.
(b) "Affiliate" and "Associate" have the respective meanings given
to such terms in Rule 12b-2 of the Exchange Act.
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(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial owner"
under Rule 13d-3 of the Exchange Act Regulations; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security as a result of an agreement,
arrangement or understanding to vote such security if it (A) arises
solely from a revocable proxy given in response to a proxy or consent
solicitation made under the Exchange Act and the Exchange Act
Regulations, and (B) is not reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such other
Person) 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 described in subparagraph (i)
above) or disposing of such securities (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities); or
(iii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of conditions) 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," (x) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (y) securities that may be issued upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (z) securities
that may be issued upon exercise of Rights after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Exercisability Date or pursuant to
Section 3(a) or Section 22 (the "Original Rights") or pursuant to Section 11(i)
as an adjustment to any Original Rights.
Notwithstanding anything to the contrary, the phrase "then
outstanding", when used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of securities then issued and
outstanding plus the number not then actually issued and outstanding but which
such Person is deemed to own beneficially hereunder, and any calculation of the
percentage of securities Beneficially Owned by such Person shall be subject to
the first sentence of Section 28.
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(d) "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in Dallas, Texas are authorized or
obligated by law or executive order to close.
(e) "Close of Business" for any given day means 5:00 P.M., Dallas,
Texas time, on such date; provided, however, that if such date is not a
Business Day it means such time on the next succeeding Business Day.
(f) "common stock" of any Person other than the Company means such
Person's capital stock with the greatest voting power, or, if such Person has
no capital stock, the equity securities or other equity interest having power
to control or direct the management of such Person.
(g) "Common Stock" means the shares of common stock, $0.01 par
value, of the Company.
(h) "Continuing Director" means any Person who is a member of the
Board who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a nominee or representative of an Acquiring Person or of
an Acquiring Person's Affiliate or Associate, and who (i) was a member of the
Board prior to the date of this Agreement, or (ii) becomes a member of the
Board after the date of this Agreement if such Person's nomination for election
to the Board is recommended or approved by a majority of the Continuing
Directors.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
(j) "Exchange Act Regulations" means the regulations promulgated
under the Exchange Act, as in effect on the date hereof.
(k) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(l) "Stock Acquisition Date" shall mean the first date of public
announcement (which shall include a report filed pursuant to Section 13(d) of
the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(m) "Subsidiary" means, as to any Person, any 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.
(n) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event as defined in such Sections.
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Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
this Agreement, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint Co-Rights Agents.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of:
(i) the Close of Business on the tenth Business Day after the
Stock Acquisition Date, and
(ii) the Close of Business on such date as a majority of the
Board shall determine, which date shall follow the commencement of a
tender offer (as determined under Rule 14d-2(a) under the Exchange
Act) or exchange offer by any Person (other than by 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 for
such plan acting in such capacity) if upon consummation thereof such
Person would become an Acquiring Person (the earlier of (i) and (ii)
above being the "Exercisability Date"),
the Rights:
(x) will be evidenced by the certificates for shares of
Common Stock as of and subsequent to the Record Date (which
certificates for shares of Common Stock shall be deemed also to be
Certificates for Rights, whether or not such certificates bear the
legend set forth in this Section 3) and not by separate certificates,
(y) will be held by the registered holders of the Common Stock,
and,
(z) will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the
Company).
As soon as practicable after the Exercisability Date, the Company will prepare
and execute, the Rights Agent will countersign, and the Rights Agent will send
by first-class, postage prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Exercisability Date, at the address of
such holder shown on the records of the Company, a certificate for Rights,
substantially in the form of Exhibit A (the "Rights Certificate"), for the
Rights to which such holder is entitled. As of and after the Exercisability
Date, the Rights will be evidenced solely by such Rights Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights Agreement, in substantially the
form of Exhibit B (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of 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.
Until the earlier of the Exercisability Date, the Expiration Date
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and the Final Expiration Date (as such terms are defined in this Section 3 and
in Section 7), (i) the Rights will be evidenced by such certificates for Common
Stock registered in the names of the holders thereof (together with a copy of
the Summary of Rights), and (ii) the surrender for transfer of any certificate
for Common Stock, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.
(c) Rights shall, without any further action, be issued in respect
of all shares of Common Stock which are issued (including any shares of Common
Stock held in treasury) after the Record Date but prior to the earlier of the
Exercisability Date and the Expiration Date. Certificates representing Common
Stock issued after the Record Date shall bear substantially the following
legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in the Rights Agreement between Horizon
Mental Health Management, Inc. (the "Company") and American Stock
Transfer & Trust Company (the "Rights Agent") dated as of February 6,
1997 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, 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 therefor. Under certain circumstances,
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. The Rights shall not be exercisable by a holder in any
jurisdiction where the requisite qualification to the issuance to such
holder of the Rights or the exercise by such holder of the Rights in
such jurisdiction, shall not have been obtained or obtainable.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates each shall be substantially in the
form of Exhibit A attached hereto and may have such marks of identification or
designation and such legends, summaries or endorsements 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 any rule or
regulation thereunder or with any rule or regulation of any stock exchange or
market on which the Rights may from time to time be listed, or to conform to
usage. Subject to Section 11 and Section 22, 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 Exercise Price per share set forth
therein.
(b) Any Rights Certificate that represents Rights that are
beneficially owned by:
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(i) an Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which
receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person (or any such Affiliate or
Associate) to holders of equity interests therein, or to any Person
with whom such Acquiring Person (or Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock, or the Company, or (B) a
transfer which a majority of the Board has determined to be part of a
plan, arrangement or understanding which has a primary purpose or
effect the avoidance of Section 7(e) (the Rights held by Persons
identified in (i), (ii) and (iii) collectively, "Acquired Person
Rights"),
shall, upon the written direction of a majority of the Board, contain (to the
extent feasible) the following legend:
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 7(e) shall be operative whether or not the legend is contained on any
Rights Certificate.
Section 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company
by any of its Chairman of the Board, Chief Executive Officer, President, any
Vice President, or Treasurer and shall also be attested by any of its Secretary
or one of its Assistant Secretaries. The signature of any of these officers on
the Rights Certificates may be manual or facsimile. The Rights Certificates
shall be countersigned by the Rights Agent, by manual signature of an
authorized signatory, and no Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless so
countersigned. A Rights Certificate bearing the signatures of individuals who
were the proper officers of the Company at the actual date of execution of such
Rights Certificate shall bind the Company, notwithstanding that any of them
ceased to hold such offices prior to the countersignature of such Rights
Certificate or did not hold such offices on the date of this Agreement. Such
countersignature shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.
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(b) Following the Exercisability Date, the Rights Agent will keep
at its office designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates. Such books shall show the name and address of each
holder, the number of Rights evidenced thereby, and the certificate number and
date of each Rights Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to Sections 4(b), 7(e) and 14, at any time after the
Close of Business on the Exercisability Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate may be transferred,
split up, combined, or exchanged (collectively, a "Transfer") for Rights
Certificates entitling the registered holder to purchase the 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 surrendered entitle
such holder to purchase. Any registered holder desiring to Transfer any Rights
Certificate shall make such request in writing delivered to the Rights Agent
and shall execute and surrender such Rights Certificate at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action to transfer any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the form of assignment on the 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) of the Rights
represented by such Rights Certificate as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Sections 4(b),
7(e) and 14, countersign and deliver to the Person entitled thereto the Rights
Certificates so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed for any Transfer of
Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby, there shall be issued, in exchange for and upon cancellation of the
mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of and of like tenor and representing the equivalent number of Rights as
the prior Rights Certificate; provided, however, that a new Rights Certificate
shall be issued only upon reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, if such reimbursement is requested
by the Company or the Rights Agent; and provided further, that, in the case of
loss, theft or destruction of a Rights Certificate, a new Rights Certificate
shall be issued only upon receipt of evidence satisfactory to the Company and
the Rights Agent of such loss, theft or destruction and, if requested by the
Company or the Rights Agent, indemnity or security reasonably satisfactory to
the Company or the Rights Agent (as the case may be).
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.
(a) At any time after the Exercisability Date and prior to the
earlier of (i) the Close of Business on March 4, 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights
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are redeemed as provided in Section 23 (the "Redemption Date") and (iii) the
time at which the Rights are exchanged as provided in Section 24 (the earlier
of (i), (ii) and (iii) being the "Expiration Date"), the registered holder of
any Rights Certificate may, subject to the provisions of Section 7(e), exercise
the Rights evidenced thereby in whole or in part upon surrender of the Rights
Certificate, with the form of election to purchase duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Exercise Price for the number of shares of Common
Stock (or, following a Triggering Event, other securities, cash or other
assets, as the case may be) for which such surrendered Rights are then
exercisable.
(b) The purchase price for each one share of Common Stock upon
exercise of the Rights initially shall be $83.33 subject to adjustment from
time to time as provided in Sections 11 and 13(a) (such purchase price, as so
adjusted, being the "Exercise Price").
(c) The payment of the Exercise Price (as such amount may be
reduced pursuant to Section 11(a)(iii)) may be made in cash or by certified or
bank check or bank draft payable to the order of the Company. Upon receipt of
a Rights Certificate representing exercisable Rights, with the form of election
to purchase duly executed, accompanied by payment in the manner described above
of the Exercise Price for the shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
to be purchased thereby, and of an amount equal to any applicable transfer tax
required to be paid by the holder under Section 6 or evidence satisfactory to
the Company of payment of such tax), the Rights Agent shall, subject to Section
20(j), promptly:
(i) requisition from the transfer agent for the Common Stock
certificates for such number of shares of Common Stock as are to be
purchased, and the Company will direct the transfer agent to comply
with such request;
(ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares under Section 14;
(iii) cause such Common Stock certificates to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such names designated by such holder; and
(iv) after receipt thereof of such cash, if any, deliver the
same to or upon the order of the registered holder of such Rights
Certificate.
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(a),
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 the event of an exercise of the Rights by a holder pursuant
to Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to
the registered holder thereof after
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imprinting, stamping, or otherwise indicating thereon that the rights
represented by such Rights Certificate no longer include the rights provided by
Section 11(a)(ii). In addition, in the event that the registered holder of any
Rights Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing the Rights remaining unexercised (and, if
some of the Rights exercised were exercised pursuant to Section 11(a)(ii),
indicating by imprint, stamp or otherwise the number of Rights remaining which
continue to include rights provided by Section 11(a)(ii)) 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 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, all Acquiring
Person Rights shall be null and void without any further action, and no holder
of such Acquiring Person Rights shall have any rights whatsoever whether under
a Rights Certificate, this Agreement or otherwise.
The Company shall use all reasonable efforts to ensure that Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any determination
under this Section 7(e) or Section 4(b) with respect to Acquiring Person
Rights.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action upon any purported exercise by a registered
holder unless such registered holder shall have (i) completed and executed 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) of the Rights represented by such Rights
Certificate as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for exercise or Transfer 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 this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any Rights Certificates acquired by
the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or, at the written
request of the Company, shall destroy such canceled Rights Certificates and
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Stock.
(a) The Company (i) shall at all times prior to the Expiration
Date cause to be reserved out of its authorized and unissued shares of Common
Stock, or any authorized and issued shares of Common Stock held in its
treasury, the number of shares of Common Stock
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that, as provided in this Agreement, including Section 11(a)(iii), will be
sufficient to permit the exercise of all outstanding Rights; and (ii) at all
times following the occurrence of a Section 11(a)(ii) Event, shall so reserve
and keep available a sufficient number of any other securities that may be
required to permit the exercise of the Rights pursuant to this Agreement.
(b) The Company shall use its best efforts:
(i) as soon as practicable following (A) the occurrence
of a Section 11(a)(ii) Event and a determination by the Company under
Section 11(a)(iii) of the consideration to be delivered by the Company
upon exercise of the Rights or (B) if so required by law, the
Exercisability Date, to file a registration statement (the
"Registration Statement") on an appropriate form under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the
securities that may be acquired upon exercise of the Rights;
(ii) to cause the Registration Statement to become
effective as soon as practicable after the date of such filing (such
date being the "Registration Date");
(iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements
of the Securities Act) until the earlier of (A) the date as of which
the Rights are no longer exercisable for the securities covered by the
Registration Statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration
Date, to take such action as may be required to ensure that any
acquisition of securities upon exercise of the Rights complies with
any applicable state securities or "blue sky" laws.
The Company may temporarily suspend the exercisability of the Rights, for a
period not to exceed 90 days after the date set forth in subclause (A) or (B)
of clause (i) of the first sentence of this Section 9(b) to prepare to file
such Registration Statement and permit it to become effective. Upon any such
suspension of exercisability, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended
and, upon termination of such suspension, the Company shall issue a public
announcement stating that the suspension is no longer in effect. In addition,
if the Company shall determine that a Registration Statement is required
following the Exercisability Date, the Company may temporarily suspend the
exercisability of the Rights until such time as such Registration Statement has
been declared effective. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law, or a Registration
Statement shall not have been declared effective.
(c) The Company shall take such action as may be necessary to
ensure that all shares of Common Stock (and, following the occurrence of a
Triggering Event, any other securities) that may be delivered upon exercise of
Rights shall be, at the time of delivery of the certificates for such
securities, duly and validly authorized and issued, and fully paid and
nonassessable.
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(d) So long as the shares of Common Stock (and, after the
occurrence of a Triggering Event, any other securities) issuable upon the
exercise of the Rights may be listed on any national securities exchange or
market, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange or market upon official notice of issuance upon such
exercise.
(e) The Company may pay or may require the Rights holder to pay
any documentary, stamp or transfer tax imposed for the issuance or delivery of
the Rights Certificates or certificates for shares of Common Stock (or,
following the occurrence of a Triggering Event, any other securities or other
assets) upon the exercise of Rights. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock (or any other
securities, cash or assets, as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such 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 shares of Common Stock (or, following the occurrence of a
Triggering Event, other securities) 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 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 Exercise Price
(and any applicable transfer taxes) was made; provided, however, that if such
date is one upon which the Common Stock (or other securities) transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be date as of, the
next succeeding Business Day on which the Common Stock (or other securities)
transfer books of the Company are open. Prior to exercise, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company as to the securities for which the Rights shall be exercisable,
including 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 Exercise Price, Number and Kind of
Shares or Number of Rights. The Exercise Price, the number and kind of
securities 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 the Company, at any time
after the date of this Agreement, shall (A) declare a dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the outstanding Common Stock
into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a share exchange or merger in
which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(e), the
Exercise Price in effect at the time of the record date of such
dividend or of the effective date of such subdivision, combination or
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reclassification, and the number and kind of shares of Common Stock or
other capital stock, as the case may be, issuable upon exercise of the
Rights, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon
payment of the Exercise Price then in effect, the aggregate number and
kind of shares of Common Stock or other capital stock, as the case may
be, which, if such Right had been exercised immediately prior to such
date, such holder would have owned upon such exercise and been
entitled to receive upon such dividend, subdivision, combination or
reclassification; provided, however, that if the record date for any
such dividend, subdivision, combination or reclassification shall
occur prior to the Exercisability Date, the Company shall make an
appropriate adjustment to the Exercise Price in lieu of adjusting (as
described above) the number of shares of Common Stock (or other
capital stock, as the case may be) issuable upon exercise of the
Rights. If an event occurs which would require an adjustment under
both Section 11(a)(i) and Section 11(a)(ii), the adjustment in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment under Section 11(a)(ii).
(ii) In the event that any Person shall become an
Acquiring Person, other than pursuant to any transaction set forth in
Section 13(a), then, promptly following the occurrence of such event
(a "Section 11(a)(ii) Event"), each holder of a Right (except as
provided in Section 11(a)(iii) and in Section 7(e)) shall thereafter
have, and proper provision shall be made so each such holder shall
have, the right to receive, upon proper exercise thereof at a price
equal to the then current Exercise Price, such number of shares of
Common Stock as shall equal the result obtained by (x) multiplying the
then current Exercise Price by the number of shares of Common Stock
for which a Right was potentially exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event and (y) dividing that
product by 50% of the Current Market Price (as defined in Section
11(d)) per share of the Common Stock on the date of the first
occurrence of a Section 11(a)(ii) Event (such number of shares, the
"Adjustment Shares").
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's Certificate of
Incorporation but are not outstanding and are not reserved for
issuance 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, by a vote of the majority of the Board, shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess
being the "Spread"); and
(B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon
payment of the applicable Exercise Price, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity securities
of the Company, (such other equity securities being referred
to as "Capital Stock Equivalents"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value, where such
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aggregate value has been determined by a majority of the Board
after receiving advice from a nationally recognized investment
banking firm;
provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption
pursuant to Section 23 expires (the later of (x) or (y) being referred
to herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, shares of
Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash shall have an aggregate value equal to the
Spread. To the extent that the Company determines that some action
need be taken pursuant to the first sentence of this Section
11(a)(iii), subject to Section 7(e), such action shall be applied
uniformly to all outstanding Rights. For purposes of this Section
11(a)(iii), the value of the Common Stock (and of any Common Stock
Equivalent) shall be the Current Market Price per share of Common
Stock on the Section 11(a)(ii) Trigger Date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Common Stock (or shares having the same rights, privileges
and preferences as shares of Common Stock ("Equivalent Common Stock")) or
securities convertible into Common Stock or Equivalent Common Stock at a price
per share of Common Stock or per share of Equivalent Common Stock (or having a
conversion price per share, if a security is convertible into Common Stock or
Equivalent Common Stock) less than the Current Market Price per share of Common
Stock on such record date, then the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock and/or Equivalent
Common Stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock and/or Equivalent Common Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid in a form other than cash, the value of such noncash consideration shall
be as determined in good faith by a majority of the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares of Common
Stock owned by or held for the account of the Company or any Subsidiary shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event such rights or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect if
such record date had not been fixed.
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(c) In case the Company shall fix a record date for a distribution
to all holders of shares of Common Stock (including any such distribution made
in connection with a share exchange or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock but
including any dividend payable in stock other than Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
then the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the then
Current Market Price per share of Common Stock on such record date less the
fair market value (as determined in good faith by a majority of the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Common Stock and the denominator of which shall be such Current Market Price
per share of Common Stock. Such adjustments shall be made successively,
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been fixed.
(d) The "Current Market Price" per share of Common Stock (or,
after the occurrence of a Triggering Event, any other securities) on any date
shall be the average of the daily closing prices per share of such Common Stock
(or other securities) for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that
if, prior to the expiration of such requisite 30 Trading Day period, the issuer
announces either (A) a dividend or distribution on such Common Stock (or other
securities) payable in such Common Stock (or other securities) or securities
convertible into such Common Stock (or other securities), other than the
Rights, or (B) any subdivision, combination or reclassification of such Common
Stock (or other securities), then, following the ex-dividend date for such
dividend or the record date for such subdivision, as the case may be, the
"current market price" shall be properly adjusted to take into account such
event. The "closing price" for each day shall be, if the shares of Common
Stock (or other securities) are listed and admitted to trading on a national
securities exchange, as reported in the principal consolidated transaction
reporting system for securities listed on the principal national securities
exchange on which such shares are listed or admitted to trading or, if such
shares of Common Stock (or other securities) are not listed or admitted to
trading on any national securities exchange, the last quoted sales price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported on The Nasdaq Stock Market's National
Market (the "Nasdaq National Market") or such other system then in use, or, if
on any such date such shares 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 shares of Common Stock (or other
securities) selected by a majority of the Board. If on any such date no market
maker is making a market in such shares, the fair value of such shares on such
date, as determined in good faith by a majority of the Board, shall be used.
The term "Trading Day" shall mean a Business Day or, if such shares are listed
or admitted to trading on any national securities exchange or the Nasdaq
National Market, a day
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on which the principal national securities exchange on which such shares are
listed or admitted to trading or the Nasdaq National Market is open for the
transaction of business.
(e) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
in the Exercise Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share of Common Stock (or other securities). Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(i) or 13(a), the holder of any Right 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 Exercise Price
thereof shall be subject to adjustment from time to time in the manner and on
terms as nearly equivalent as practicable to the Common Stock contained in this
Section 11 and the provisions of Sections 7, 9, 10, 12, 13 and 14 for the
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of Common Stock
(or other securities or amount of cash or combination thereof) that may be
acquired from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price made in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, that number of shares of Common Stock or other
securities (calculated to the nearest ten-thousandth of a share) obtained by
(i) multiplying (x) the number of shares of Common Stock
or other securities covered by a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price; and
(ii) dividing that product by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment
of the Exercise Price to adjust the number of Rights, in lieu of any adjustment
in the number of shares of Common Stock (or other securities) that may be
acquired upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
shares of Common Stock (or other securities) for which a Right was exercisable
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immediately prior to such adjustment. Each Right held of record prior to such
adjustment shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Exercise Price in effect immediately
prior to adjustment by the Exercise Price in effect immediately after
adjustment of the Exercise Price. 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 Exercise Price is adjusted
or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least ten days later than such announcement date. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), 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.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of shares of Common Stock (or other securities) issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per share and the number of
shares of Common Stock (or other securities) which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then par value, if any, of the Common
Stock (or other securities) 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 such fully
paid and nonassessable number of shares of Common Stock (or other securities)
at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance of that number of shares of Common Stock and shares of other
capital stock or securities of the Company, if any, issuable to any holder of a
Right exercised after such record date that is over and above the number of
shares of Common Stock and shares of other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board 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 Common Stock
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or 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 holders or shall
reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the Exercisability
Date:
(i) effect a share exchange with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o));
(ii) merge with or into or consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)); or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of 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 other
Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o));
if
(x) at the time of or immediately after such share
exchange, merger, consolidation or sale, 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
(y) prior to, simultaneously with, or immediately after
such share exchange, merger, consolidation or sale, the Person which
constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) shall have distributed or otherwise transferred to
its stockholders (or other persons holding an equity interest in such
Person) Rights previously owned by such Person or any of its
Affiliates and Associates;
provided, however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to effect a share exchange with, merge with or into,
consolidate with or sell or transfer assets or earning power to, any other
Subsidiary of the Company or the Company.
(o) After the Exercisability Date, the Company shall not, except
as permitted by Section 23, Section 24 or Section 27, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will materially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 and Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for
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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
Exercisability 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 such
adjustment unless and until it shall have received such certificate.
Section 13. Merger, Consolidation or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly:
(x) the Company shall effect a share exchange with, or
merge with and into, or consolidate with any other Person (other than
a Subsidiary of the Company in a transaction with complies with
Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such share exchange, merger or consolidation,
(y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)) shall effect a share
exchange with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such share
exchange or merger and, in connection with such share exchange or
merger, all or part of the outstanding shares of Common Stock shall be
converted into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer) to any
Person (other than the Company or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)), in one
or more 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),
(any such event described in clause x, y or z above being a "Section 13
Event"); then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section
7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Exercise Price (disregarding any
adjustment of the Exercise Price pursuant to Section 11(a)(ii)), such
number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of common stock of the Principal Party
(hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of right refusal, transfer restrictions or other
adverse claims, as shall be equal to the result obtained by:
(A) multiplying the then current Exercise Price
by the number of shares of Common Stock for which a Right is
exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of
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shares of such Common Stock for which a Right was exercisable
immediately prior to the first occurrence of such Section
11(a)(ii) Event by the Exercise Price in effect immediately
prior to such first occurrence), and
(B) dividing that product (which, following the
first occurrence of a Section 13 Event, shall be the "Exercise
Price" for all purposes of this Agreement) by 50% of the
Current Market Price per share of the common stock of such
Principal Party on the date of consummation of such Section 13
Event;
(ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall thereafter apply only to such Principal
Party;
(iv) such Principal Party shall take such steps (including
the reservation of a sufficient number of shares of its common stock)
in consummating such transaction as may be necessary to ensure that
this Agreement shall thereafter be applicable to its shares of common
stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) shall be of no
further effect.
(b) "Principal Party" shall mean:
(i) in the case of any transaction in clause (x) or (y)
of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Common Stock are
converted in such transaction, or, if there is more than one such
issuer, the issuer of common stock that has the highest aggregate
Current Market Price and (B) if no securities are so issued, the
Person that is the other party to such transaction, or, if there is
more than one such Person, the Person the common stock of which has
the highest aggregate Current Market Price; and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that receives
the largest portion of the assets or earning power transferred
pursuant to such transaction or, if each Person receives the same
portion of the assets or earning power transferred pursuant to such
transaction or if the Person receiving the largest portion of the
assets or earning power cannot be determined, whichever Person the
common stock of which has the highest aggregate Current Market Price;
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, registered under Section 12 of the Exchange Act
("Registered Common Stock"), or such Person
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is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other
Person;
(B) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and (1) such Person is a direct or indirect Subsidiary of
another Person but is not a direct or indirect Subsidiary of
another Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; or (2) such Person is directly or
indirectly controlled by more than one Person, and one or more
of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other
Persons is the issuer of the Registered Common Stock having
the highest aggregate Current Market Price; or (3) such Person
is directly or indirectly controlled by more than one Person,
and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever
ultimate parent entity is the corporation having the greatest
stockholders equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have 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 paragraphs (a) and (b) of this Section 13 and further providing
that the Principal Party will:
(i) (A) file on an appropriate form, as soon as
practicable following the execution of such agreement, a registration
statement under the Securities Act with respect to the common stock
that may be acquired upon exercise of the Rights, (B) cause such
registration statement to remain effective (and to include a
prospectus complying with the requirement of the Securities Act) until
the Expiration Date, and (C) as soon as practicable following the
execution of such agreement, take such action as may be required to
ensure that any acquisition of such common stock upon the exercise of
the Rights complies with any applicable state securities or "blue sky"
laws; and
(ii) 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.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of
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(i) causing such Principal Party to issue, 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
or securities exercisable for, or convertible into, common stock of
such Principal Party at less than such then Current Market Price
(other than to holders of Rights under this Section 13); or
(ii) providing for any special payment, tax or similar
provisions for the issuance of the common stock of such Principal
Party pursuant to Section 13;
then, in such event, the Company shall not consummate any such transactions
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that such
provision 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) This Section 13 shall similarly apply to successive mergers,
consolidations, or 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.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue or distribute
Rights which evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the market value
of a whole Right shall be the closing price (as the term "closing price" is
used in Section 11(d)) of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue or distribute
fractions of shares of Common Stock (or other securities) upon exercise of the
Rights. In lieu of such fractional shares of Common Stock (or other
securities), the Company shall pay an amount in cash equal to the same fraction
of the then current market value of one share of Common Stock (or other
securities). For purposes of this Section 14(b), the current market value of
the one share of Common Stock (or other securities) shall be the closing price
(as the term "closing price" is used in Section 11(d)) of one share of Common
Stock (or other securities) for the Trading Day immediately prior to the date
of such exercise.
(c) The holder of a Right, by the acceptance of the Right,
expressly waives the right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
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Section 15. Rights of Action. Subject to Section 7(e), all rights of
action in respect of this Agreement, other than rights of action vested in the
Rights Agent pursuant to Section 18 and Section 20 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Exercisability Date, the registered holders of certificates representing shares
of Common Stock); and any registered holder of a Rights Certificate (or, prior
to the Exercisability Date, of a certificate representing shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Exercisability Date, of a certificate
representing shares of Common Stock), may, in his own behalf and for his own
benefit, enforce (and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce) his right to exercise the
Rights evidenced by such Rights Certificate. Without limiting the foregoing or
any remedies available to the holders of Rights, it is 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 Exercisability Date, the Rights shall be
transferable only in connection with the transfer of Common Stock;
(b) after the Exercisability Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and duly 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 Exercisability 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 Certificate or the associated Common Stock Certificate made by anyone
other than the Company or the Rights Agent), and neither the Company (subject
to the last sentence of Section 7(e) hereof) nor the Rights Agent shall 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 any 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, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
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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 shares of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights; 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 manner submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or, except as provided in Section 25 hereof, to receive notice of meetings or
other actions affecting stockholders, or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by such Rights Certificate
shall have been duly exercised.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses, including reasonable
fees and disbursements of its counsel, incurred in connection with the
execution and administration of this Agreement and the exercise and performance
of its duties hereunder. The Company shall indemnify the Rights Agent, its
officers, employees, agents and directors for, and hold each of them 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 or such other indemnified
party in connection with the acceptance or administration of this Agreement and
performance hereunder, including the costs and expenses of defending against
any claim of liability therefrom, directly or indirectly, and will promptly
reimburse the Rights Agent for legal and other expenses reasonably incurred in
defending any such claim.
(b) The Rights Agent shall incur no liability for any action
taken, suffered or omitted by it in connection with its administration of this
Agreement or the performance of its duties hereunder 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 have
been signed, executed and, where necessary, verified or acknowledged by the
proper Person.
Section 19. Merger or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or consolidated or with which it may effect a share
exchange, or any corporation resulting from any merger, consolidation or share
exchange to which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate trust or stockholder
services businesses 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 document 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
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provisions of Section 21 hereof. In case, at the time such successor Rights
Agent becomes Rights Agent, 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 Certificate 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 Certificate 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
Certificate 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 expressly imposed by this Agreement (and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent) upon the following terms and conditions:
(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
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
specified herein) may be deemed to be conclusively proved and established by a
certificate signed by any person reasonably believed by the Rights Agent to be
any of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer, any Assistant Treasurer, 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 the Rights Agent in reliance upon such
certificate.
(c) The Rights Agent shall not be liable for any of the statements
of fact or recitals contained in this Agreement or in the Rights Certificate or
be required to verify the same (except as to its countersignature on such
Rights Certificates).
(d) The Rights Agent is serving as an administrative agent and,
accordingly, shall not have any responsibility for the validity or legality of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or for the validity, legality or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
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responsible for any breach of the Company of any covenant or failure by the
Company to satisfy conditions contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under
Section 11 or Section 13 or 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 after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or any other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock or any other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and deliver
all such further acts, instruments and assurance as may reasonably be required
for the performance by the Rights Agent of its duties under this Agreement.
(f) The Rights Agent is hereby authorized and directed to accept
instructions for the performance of its duties hereunder from any person
reasonably believed by the Rights Agent to be the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer 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, the holder of any Rights
Certificate or any other Person for any action taken or suffered to be taken by
it in good faith in accordance with such instructions or for any delay in
acting while awaiting instructions.
(g) 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
offer 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
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.
(h) 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 if reasonable care was exercised in the
selection of such attorneys and agents and continued employment thereof.
(i) The Rights Agent shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties or in the exercise of its rights hereunder if the Rights Agent
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
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(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, either has not
been completed, has not been signed, or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
on such requested exercise or transfer without first consulting the Company.
If such certificate has been completed and signed, the Rights Agent may assume
without further inquiry that the Rights Certificate is not owned by a person
described in Section 4(b) or Section 7(e).
(k) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
Section 21. Change of Rights Agent. The 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 to the holders of Rights Certificates by
first-class mail. The Company may remove the Rights Agent upon 30 days' notice
in writing mailed to the Rights Agent and to each transfer agent of the Common
Stock by registered or certified mail, and 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 30 days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a 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 corporation organized and doing business under the laws of the
United States of any state of the United States, in good standing, and may be
the Company or a Subsidiary of the Company. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if 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 shall 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 mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in 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.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or 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 a majority of the Board to reflect any change made
in accordance with this Agreement in the Exercise Price or the number or kind
or class of shares or other securities or property that may be acquired under
the Rights Certificates. In addition, in connection with the issuance or sale
of shares of Common Stock following the Exercisability Date and prior to the
Expiration Date, the Company:
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(a) shall, 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, and
(b) may, in other case, if deemed necessary or appropriate by the
Board,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that no such Rights
Certificate shall be issued if, and to the extent, that (x) 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, or (y) appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board pursuant to
this Section 23 and shall not be redeemed in any other manner. Notwithstanding
anything contained or implied in this Agreement to the contrary, the Rights
shall not be exercised after the occurrence of a Section 11(a)(ii) Event until
the Company's right of redemption has expired.
(b) The Board may, at its option, at any time prior to the Close
of Business on the tenth Business Day after the Stock Acquisition Date, redeem
all, but not less than all, of the then outstanding Rights at a redemption
price of $0.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that with respect to any redemption of Rights under either
clauses (i) and (ii) below, the Rights may be redeemed only if there are
Continuing Directors then in office and the Board, with the concurrence of a
majority of the Continuing Directors then in office, approves such redemption:
(i) such approval occurs at any time after any Person becomes an Acquiring
Person, or (ii) such approval occurs at any time after a change (resulting from
a proxy solicitation or from a vote of stockholders or in any other manner) in
a majority of the directors in office at the commencement of such solicitation,
or prior to such vote if any Person who is a participant in such solicitation
or vote has stated (or, if the majority of the directors in office at the
commencement of such solicitation or prior to such vote has determined in good
faith) that such Person (or any of its Affiliates or Associates) intends to
take or may consider taking, any action that would result in such Person
becoming an Acquiring Person or that would result in the occurrence of a
Section 11(a)(ii) Event. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the Current Market Price per
share of Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board; provided that if the Company
elects to pay the Redemption Price in shares of Common Stock, the Company shall
not be required to issue fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay an amount of cash
equal to the same fraction of the Current Market Price of a share of Common
Stock.
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(c) Immediately upon the action of the Board ordering the
redemption of the Rights, and without any notice or further action, 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. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after the Board ordering the
redemption of the Rights, the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their addresses as they appear
upon the registry books of the Rights Agent or, prior to the Exercisability
Date, on the registry books of the transfer agent for the Common Stock of the
Company. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof and other than in connection with the purchase of shares of
Common Stock prior to the Exercisability Date.
Section 24. Exchange.
(a) The Board may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or any 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) or Section 11(a)(ii)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"); provided, however, that the
Rights may be so exchanged only if (i) there are Continuing Directors then in
office and (ii) the Board approves such exchange with the concurrence of a
majority of the Continuing Directors then in office.
(b) Immediately upon the action of the Board ordering the exchange
of any Rights, and without any notice or further action, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of 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 such Rights at their 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) or Section 11(a)(ii)) held by each holder of Rights.
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(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
the exchange of Rights, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.
(d) The Company shall not be required to issue or distribute
certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay an amount in cash
equal to the same fraction of the Current Market Price of a share of Common
Stock. For the purposes of this paragraph (d),the current market price of a
share of Common Stock shall be the closing price of a share of Common Stock (as
the term "closing price" is used in Section 11(d)) for the Trading Day
immediately prior to the date of exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Exercisability Date,
(i) to pay any dividend payable in stock of any class or
to make other distribution to the holders of Common Stock (other than
a regular quarterly cash dividend out of earnings or retained earnings
of the Company);
(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;
(iii) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Common Stock);
(iv) to effect any share exchange, consolidation or merger
into or with any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of
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 (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)); or
(v) to effect the 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, a notice
of such proposed action (which shall specify the record date for the purposes
of such stock dividend or distribution of rights or warrants, or the date on
which such reclassification, share exchange, merger, consolidation, sale,
transfer, 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
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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 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; provided, however, that no such notice shall be
required if any Subsidiary of the Company effects a share exchange,
consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case of any of the events set forth in Section 11(a)(ii)
shall occur, the Company shall as soon as practicable give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii).
Section 26. Notices. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
by telex, telegram or cable) and be mailed or sent or delivered, if to the
Company, at the following address (until another address is filed in writing by
the Company):
Horizon Mental Health Management, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000-0000
and, if to the Rights Agent, at the following address (until another address is
filed in writing by the Rights Agent):
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X'Xxxxx
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 Exercisability 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.
Section 27. Supplements and Amendments. Prior to the Exercisability
Date 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 this
Agreement without the approval of any holders or certificates representing
shares of Common Stock. From and after the Exercisability Date 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 this Agreement without
the approval of any holders of Rights Certificates in order:
(i) to cure any ambiguity;
30
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(ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision
herein;
(iii) to shorten or lengthen any time period hereunder; or
(iv) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which
shall be consistent with, and for the purpose of fulfilling, the
objectives of the Board in adopting this Agreement, including any
change in the number or class of shares of capital stock of the
Company for which the Rights are potentially exercisable prior to a
Triggering Event;
provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights; and provided, further,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence (A), subject to Section 31, a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Without limiting the foregoing, the
Company may at any time prior to any Person becoming an Acquiring Person amend
this Agreement to change the Exercise Price hereunder. Upon the delivery of a
certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person, from the majority of the Board, which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agents shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment which changes the rights and duties of the Rights Agent
under this Agreement shall be effective without the consent of the Rights
Agent, and no supplement or amendment shall be made which changes the
Redemption Price, the Exercise Price, the Expiration Date or the number of
shares of Common Stock (or other securities) for which a Right is exercisable
without the approval of a majority of the Board. Prior to the Exercisability
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock.
Section 28. Determinations and Actions by the Board of Directors,
etc. Any calculations of the number of shares of Common Stock or other
securities outstanding at any particular time, including for purposes of
determining the particular percentage of outstanding shares of Common Stock of
which any Person is deemed the Beneficial Owner pursuant to this Agreement,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the Exchange Act Regulations as in effect on the date hereof; provided,
however, that any references in such regulation to a holding period for
Beneficial Ownership shall not apply to this Agreement. Except as otherwise
specifically provided herein, the Board 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 may be necessary or
advisable in the administration of this Agreement, including the right and
power (i) to interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for
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purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board or by a majority of the Board in good faith
(x) shall be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y) shall not subject the
Board or any member thereof to any liability to the holders of the Rights.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give any Person other than the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Exercisability Date, registered holders of shares of 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 Exercisability
Date, registered holders of shares of 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 (i) any such term, provision, covenant or restriction is held by
such court or authority to be invalid, void or unenforceable, and a majority of
the Board determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose of effect of
this Agreement; and (ii) at the time of such holding by such court or
authority, the Rights are not redeemable, then the right of redemption set
forth in Section 23 shall be reinstated and shall not expire until the Close of
Business on the tenth day following the date of such determination by a
majority of the Board as described above.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
Section 33. Counterparts. This Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Section 34. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first above written.
HORIZON MENTAL HEALTH MANAGEMENT, INC.
By: /s/ XXXXX XXX XXXXXX
-------------------------------------
Name: Xxxxx Xxx Xxxxxx
-----------------------------------
Title: President & CEO
----------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ XXXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
----------------------------------
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EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
CERTIFICATE NO. ________RIGHTS
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS
AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON OR 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.] (1)
RIGHTS CERTIFICATE
HORIZON MENTAL HEALTH MANAGEMENT, INC.
This certifies that ___________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated February 6, 1997 (the "Rights Agreement") between
HORIZON MENTAL HEALTH MANAGEMENT, INC., a Delaware corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent (the "Rights
Agent", which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Exercisability
Date (as such term is defined in the Rights Agreement) and prior to the
Expiration Date (as such term is defined in the Rights Agreement) at the office
of the Rights Agent or its successor designated for such purpose, one fully
paid, nonassessable share of Common Stock, $.01 par value, of the Company (the
"Common Stock") at the Exercise Price initially of $83.33 per one share of
________________________
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
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Common Stock, upon presentation and surrender of this Rights Certificate with
the Election of Purchase duly executed. The number of rights evidence by this
Rights Certificate (and the number of shares of Common Stock which may be
purchased upon exercise thereof) set forth above and the Purchase Price per
shares set forth above shall be subject to adjustment in certain events as
provided in the Rights Agreement.
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 Rights
Certificate are beneficially owned by an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement) or, under certain circumstances described in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.
In certain circumstances describe in the Rights Agreement, the rights
evidenced hereby may entitle the registered holder thereof to purchase shares
of capital stock of an entity other than the Company or to receive cash or
other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the
principal office of the Rights Agent and are available from the Company upon
written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate of like tenor and date
evidencing an aggregate number of Rights equal to the aggregate number of
rights evidenced by the Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be (i) redeemed by the Company under certain
circumstances at its option at a redemption of $0.01 per Right payable at the
Company's option in cash, in Common Stock, or other consideration, or (ii)
exchanged by the Company under certain circumstances at its option for one
share of Common Stock, or other consideration, in each case subject to
adjustment in certain events as provided in the Rights Agreement.
No fractional shares of Common Stock will be issued upon the exercise
of any 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 Common
Stock or of any other securities which may
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38
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof,
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 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 signature of the proper officers of the Company.
Dated as of _______________, ______.
ATTEST: HORIZON MENTAL HEALTH MANAGEMENT, INC.
-------------------------------- --------------------------------------
Title: Title:
-------------------------- --------------------------------
Countersigned:
, Rights Agent
-----------------------
By
--------------------
Authorized Signature
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39
[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:
--------------------------------------------------------------------------------
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40
CERTIFICATE
The undersigned hereby certificates 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 or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(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 or an Affiliate
or Associate of an Acquiring Person.
Dated: ,
------------------- ---- -------------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspondence to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
The signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix
a legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
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FORM OF ELECTION TO PURCHASE
(To be executed if the register holder
desires to exercise Rights represented
by the Rights Certificate)
To: HORIZON MENTAL HEALTH MANAGEMENT, 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 print name and address)
--------------------------------------------------------------------------------
Please insert social security
or other identifying number:
----------------------------------------------------
If such number of Rights shall not be all the rights evidence 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 print name and address)
--------------------------------------------------------------------------------
Please insert social security
or other identifying number:
----------------------------------------------------
Dated: ,
------------------------------------ --------
----------------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof.
Dated: ,
------------------- ---- -------------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
The signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event the certification set forth above is not completed, the Company
will deem the beneficial owner of the Right evidenced by this Rights
Certificate to be a Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and will not issue 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).
A-7
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EXHIBIT B
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of HORIZON MENTAL HEALTH MANAGEMENT, INC. Common
Stock as of February 19, 1997 (the "Record Date") will receive a distribution
on March 4, 1997 (the "Distribution Date") of one stock purchase right (a
"Right") per share of Common Stock in accordance with and pursuant to a Rights
Agreement between the Company and American Stock Transfer & Trust Company dated
February 6, 1997. A Right will also accompany each share of Common Stock
issued following the Record Date. Each Right, when it first becomes
exercisable, entitles the holder to purchase from Horizon Mental Health
Management, Inc. one share of Common Stock at an initial exercise price of
$83.33 per share (the "Exercise Price"), subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be
exercisable or transferable apart from the shares of Common Stock with respect
to which they were distributed, and will be evidenced only by the certificates
representing such shares. The Rights will become exercisable and transferable
apart from the Common Stock on a date (the "Exercisability Date") that is the
earlier of (i) the close of business on the tenth business day after the Stock
Acquisition Date, defined as the first date of a public announcement that a
person or group of affiliated or associated persons has become an Acquiring
Person (as defined below) or (ii) the close of business on such date as a
majority of the Board of Directors shall determine, which date shall follow the
commencement of a tender or exchange offer that, if consummated, would result
in a person or group becoming an Acquiring Person. The Rights will be
exercisable from the Exercisability Date until the Expiration Date, which is
the earlier of the close of business on the ten-year anniversary of the date of
the Rights Agreement (the "Final Expiration Date"), the date the Rights are
redeemed by the Company, or the date the Rights are exchanged by the Company,
at which time they will expire.
A person or group becomes an Acquiring Person when such person or
group acquires or obtains the right to acquire beneficial ownership of 15% or
more of the then outstanding shares of Common Stock, with certain exceptions
described in the Rights Agreement (including exceptions for shares owned by the
Company or a subsidiary or employee benefit plan of the Company, and for shares
owned by any person who the Board of Directors determines inadvertently reached
such 15% beneficial ownership level and who promptly divests sufficient shares
such that 15% or greater beneficial ownership ceases).
Transferability of Rights. Prior to the Exercisability Date, the
Rights will not be transferable apart from the shares of Common Stock to which
they are attached. Thus, the surrender or transfer of any Common Stock
certificate prior to that date will also constitute the transfer of the Rights
associated with the shares represented by such certificate. Until the
Exercisability Date (or earlier redemption, exchange or expiration of the
Rights), new Common Stock certificates issued after the Record Date, upon
transfer or new issuance of shares of Common Stock, will contain a notation
incorporating the Rights Agreement by reference. Until the Exercisability Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates for shares of Common Stock, outstanding as of
the
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Record Date, even without such notation or a copy of a Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such certificate. As soon as
practicable after the Exercisability Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to each record holder of shares
of Common Stock as of the close of business on the Exercisability Date and, in
certain circumstances, holders of certain shares issued after the
Exercisability Date. Until exercised, the holders will not have any rights of
holders of Common Stock, including any rights to vote or receive dividends on
the Common Stock.
Flip-In Rights. Upon the acquisition of 15% of the Common Stock by an
Acquiring Person (a "Flip-In Event"), each holder of a Right will thereafter
have the right (the "Flip-In Right") to receive, upon exercise and payment of
the Exercise Price, the number of shares of Common Stock having a market value
immediately prior to the Flip-In Event equal to two times the then current
Exercise Price of the Right, except that any Right that is (or, in certain
circumstances specified in the Rights Agreement, was) beneficially owned by an
Acquiring Person (or any of its affiliates or associates, as defined) will
become null and void upon the occurrence of the Flip-In Event. Cash will be
paid in lieu of fractional shares.
For example, at the Exercise Price of $83.33 per Right, if any person
becomes the beneficial owner of 15% or more of the outstanding Common Stock of
the Company, ten business days thereafter each Right (other than Rights owned
by such 15% beneficial owner or any of its affiliates or associates, which will
have become void) would entitle its holder to purchase $166.66 worth of Common
Stock for $83.33. Assuming that the Common Stock had a per share value of
$16.66 at such time, each Right would effectively entitle its holder to
purchase ten shares of Common Stock for $83.33.
Flip-Over Rights. If, at any time following an Exercisability Date,
either (i) the Company is acquired in a merger or other business combination
transaction or (ii) the Company sells or otherwise transfers more than 50% of
its aggregate assets or earning power, each holder of a Right (except Rights
previously voided as described above) will thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, shares of common stock of the
Acquiring Person having a value equal to two times the then current Exercise
Price of the Right. The Flip-Over Right will be exercisable apart from, and
regardless of the exercise or surrender of, the Flip-In Right.
Redemption of the Rights. At any time prior to the close of business
on the tenth business day following a public announcement that a party is an
Acquiring Person, the Board of Directors may redeem the Rights in whole but not
in part at a Redemption Price of $.01 per Right. Under some circumstances, the
redemption must also be approved by a majority of the members of the Board of
Directors in office at the time of the adoption of the Rights Agreement or
members whose nominations were approved by members then in office. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Exchange of the Rights. At any time after any person becomes an
Acquiring Person, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person or any of its affiliates or
associates which have become void), in whole or in
B-2
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part, for Common Stock at an exchange ratio of one share of Common Stock per
Right. Under some circumstances, the exchange must also be approved by a
majority of the members of the Board of Directors in office at the time of the
adoption of the Rights Agreement or members whose nominations were approved by
members then in office.
Adjustments. The Exercise Price payable, and the number of shares of
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights, options or warrants to subscribe for or
purchase Common Stock at a price, or securities convertible into Common Stock
with a conversion price, less than the then current market price of the Common
Stock or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in shares of
Common Stock) or of subscription rights or warrants (other than those referred
to above).
Reserved Shares/Substitution of Assets. The Rights Agreement
contemplates that the Company will reserve a sufficient number of authorized
but unissued shares of Common Stock to permit the exercise in full of the
Rights should the Rights become exercisable. The Board of Directors may (and
under certain circumstances is obligated to) issue other equity securities or
assets upon the exercise of the Rights if sufficient shares of Common Stock are
not available for issuance. The Board of Directors may make adequate provision
to substitute for the shares of Common Stock which are not available for
issuance upon exercise of such Rights either cash, other equity securities of
the Company (including, without limitation, shares of Preferred Stock of the
Company), debt securities of the Company, other assets, or a combination of the
foregoing, having an aggregate value (as determined by a majority of the Board
of Directors after receiving advice from a nationally recognized investment
banking firm) equal to the value of the shares of Common Stock unavailable for
issuance upon exercise of the Rights. In addition, the Board of Directors,
subject to certain limitations, may amend the Rights to change the Exercise
Price and therefore the number of shares of Common Stock issuable upon exercise
of the Rights. If the Company does not take such action within 30 days
following the later of a Flip-In Event or the date on which the Company's right
of redemption with respect to the Rights expires, then the Company will be
required to deliver cash as the substitute for the unavailable authorized
shares of Common Stock.
Amendment of the Rights Agreement. At any time prior to the
Exercisability Date, the Board of Directors may amend any provision of the
Rights Agreement in any manner, including to change the Exercise Price, without
the approval of the holders of the Common Stock. Thereafter, subject to
certain limitations, the Board of Directors may amend the Rights Agreement
without the approval of the holders of the Common Stock so long as the
interests of the holders of the Rights are not adversely affected, including
generally (i) to shorten or lengthen any time period under the Rights Agreement
or (ii) in any manner that the Board deems necessary or desirable, so long as
such amendment is consistent with and for the purpose of fulfilling the
objectives of the Board of Directors in originally adopting the Rights
Agreement.
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