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CORVEL CORPORATION
and
U.S. STOCK TRANSFER CORPORATION
(Rights Agent)
Amended and Restated
Preferred Shares Rights Agreement
Dated as of April 11, 2002
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TABLE OF CONTENTS
Page
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Section 1 Certain Definitions ...................................................... 3
Section 2 Appointment of Rights Agent .............................................. 7
Section 3 Issue of Right Certificates .............................................. 7
Section 4 Form of Right Certificates ............................................... 9
Section 5 Countersignature and Resignation ......................................... 10
Section 6 Transfer, Split-Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates .................. 10
Section 7 Exercise of Rights; Purchase Price; Expiration Date of Rights ............ 11
Section 8 Cancellation and Destruction of Right Certificates ....................... 12
Section 9 Availability of Preferred Shares ......................................... 12
Section 10 Preferred Shares Record Date ............................................. 14
Section 11 Adjustment of Purchase Price, Number of Shares or Number of Rights ....... 14
Section 12 Certificate of Adjusted Purchase Price or Number of Shares ............... 21
Section 13 Consolidation, Merger or Sale or Transfer of Assets or Earning Power ..... 22
Section 14 Fractional Rights and Fractional Shares .................................. 24
Section 15 Rights of Action ......................................................... 25
Section 16 Agreement of Right Holders ............................................... 25
Section 17 Right Certificate Holder Not Deemed a Stockholder ........................ 26
Section 18 Concerning the Rights Agent .............................................. 26
Section 19 Merger or Consolidation or Change of Name of Rights Agent ................ 26
Section 20 Duties of Rights Agent ................................................... 27
Section 21 Change of Rights Agent ................................................... 29
Section 22 Issuance of New Right Certificates ....................................... 30
Section 23 Redemption ............................................................... 30
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Section 24 Exchange ................................................................. 31
Section 25 Notice of Certain Events ................................................. 33
Section 26 Notices .................................................................. 34
Section 27 Supplements and Amendments ............................................... 34
Section 28 Successors ............................................................... 35
Section 29 Determinations and Actions by the Board of Directors ..................... 35
Section 30 Benefits of this Agreement ............................................... 35
Section 31 Severability ............................................................. 35
Section 32 Governing Laws ........................................................... 36
Section 33 Counterparts ............................................................. 36
Section 34 Descriptive Headings ..................................................... 36
Exhibit A - 1 Form of Certificate of Designation of Series A Junior Participating
Preferred Stock of CorVel Corporation
Exhibit A - 2 Form of Certificate of Amendment of Certificate of Designation of Series A
Junior Participating Preferred Stock of CorVel Corporation
Exhibit B Form of Right Certificate, as Amended
Exhibit C Summary of Rights to Purchase Preferred Shares, as Amended
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AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT
Amended and Restated Preferred Shares Rights Agreement (this
"Agreement"), dated as of April 11, 2002, between CorVel Corporation, a Delaware
corporation (the "Company"), and U.S. Stock Transfer Corporation, a California
corporation (the "Rights Agent").
The Board of Directors of the Company has heretofore authorized
and declared a dividend of one Preferred Share (as hereinafter defined) purchase
right (a "Right") for each Common Share (as hereinafter defined) of the Company
outstanding as of the Close of Business (as hereinafter defined) on February 28,
1997 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (subject to adjustment as provided in this
Agreement) upon the terms and subject to the conditions therein set forth, and
further authorized and directed the issuance of one Right with respect to each
Common Share issued between the Record Date and the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights might be issued with
respect to Common Shares that should become outstanding after the Distribution
Date and prior to the earlier of the Redemption Date or the Final Expiration
Date in accordance with the provisions of Section 22.
Subsequently, on April 11, 2002, the Board of Directors of the
Company determined that it was in the best interests of the Company and its
stockholders to extend the term of the Rights from the original Final Expiration
Date of February 10, 2007, to February 10, 2012, to adjust the Purchase Price
for each one one-hundredth of a Preferred Share to $118, and otherwise to make
certain modifications to the terms and conditions of the Plan.
Now, therefore, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of any
such plan, (ii) Americable, Inc., a Minnesota corporation and wholly-owned
subsidiary of ENStar Inc., a Minnesota corporation, together with all Affiliates
and Associates (collectively, "Americable"), but only to the extent that
Americable shall beneficially own no more than 33% of the Common Shares of the
Company then outstanding, (iii) Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp., together with all Affiliates and
Associates (collectively, "Fidelity") but only to the extent that Fidelity shall
beneficially own no more than 18% of the Common Shares of the Company then
outstanding, or (iv) any Person, together with all Affiliates and Associates of
such Person, who or which would be an Acquiring Person solely by reason of (A)
being the Beneficial Owner of Common Shares, the Beneficial Ownership of
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which was acquired by such Person (and the Affiliates and Associates of such
Person) pursuant to any action or transaction, or series of related actions or
transactions, approved by the Board of Directors, upon the affirmative vote of a
majority of the Continuing Directors prior to the Distribution Date or (B), a
reduction in the number of issued and outstanding Common Shares pursuant to a
transaction or series or related transactions approved by the Board of
Directors, upon the affirmative vote of a majority of the Continuing Directors;
provided, however, that in the event that such Person described in this clause
(iii) does not become an Acquiring Person by reason of subclause (A) or (B) of
this clause (iii), such Person nonetheless shall become an Acquiring Person in
the event such Person, together with all Affiliates and Associates of such
Person, thereafter acquires Beneficial Ownership of any additional Common Shares
unless the acquisition of such Beneficial Ownership would not result in such
Person becoming an Acquiring Person by reason of subclause (A) or (B) of this
clause (iii). Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith (upon the affirmative vote of a majority of the
Continuing Directors) that a Person who would otherwise be an Acquiring Person,
as defined pursuant to the foregoing provisions of this paragraph (a), is
eligible to file and did file a Schedule 13G and such Person divests (and/or
causes such Person's Affiliates and/or Associates to divest) as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purpose of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "Beneficially Own," and have "Beneficial Ownership" of, any
securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 thereunder (or any
comparable or successor law or regulation);
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or fulfillment
of a condition or both) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities of the Company), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed pursuant to this Section I (c)(ii)(A) to be the
Beneficial Owner of, or to Beneficially Own, (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or (2)
securities which a Person or any of such Person's Affiliates or
Associates may be deemed to have the right to acquire pursuant to any
merger or other acquisition agreement between the Company and such
Person (or one or more of such Person's Affiliates or Associates) if
such agreement has been approved by the Board of Directors of the
Company, upon the affirmative vote of a majority of the Continuing
Directors, prior to
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there being an Acquiring Person; or (B) the right to vote alone or in
concert with others pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security pursuant to
this Section 1(c)(ii)(B) if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report) other than by reference to a proxy or
consent solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities by the Company) for
the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, (x) the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder, (y) for purposes of
determining Beneficial Ownership, officers and directors of the Company solely
by reason of their status as such shall not constitute a group (notwithstanding
that they may be Associates of one another or may be deemed to constitute a
group for purposes of Section 13(d) of the Exchange Act) and shall not be deemed
to own shares owned by another officer or director of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
(e) "Company" shall have the meaning set forth in the first
paragraph at the beginning of this Agreement.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Irvine, California time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Irvine, California time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall
mean shares of common stock, par value $0.0001 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
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(h) "Common Stock Equivalents" shall have the meaning set forth
in Section 11(a)(iv) hereof.
{i) "Continuing Director" shall mean any person who is a member
of the Board of Directors of the Company, while such person is a member of the
Board of Directors, who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative, nominee or agent of an Acquiring
Person or of any such Affiliate or Associate, and who either (i) was a member of
the Board of Directors prior to the time that any Person became an Acquiring
Person or (ii) who subsequently became a member of the Board of Directors and
who, while such person is a member of the Board of Directors, is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative, nominee or agent of an Acquiring Person or of any such Affiliate
or Associate, if such Person's nomination for election or such Person's election
to the Board of Directors is recommended or approved by a majority of the
Continuing Directors then on the Board of Directors.
(j) "Current Per Share Market Price" shall have the meaning set
forth in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iv).
(1) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(m) "Equivalent Preferred Shares" shall have the meaning set
forth in Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, as in effect on the date of this Agreement.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(p) "Issuer" shall have the meaning set forth in Section 13
hereof.
(q) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(r) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock of the Company, par value $0.0001 per share,
having the rights and preferences set forth in the Form of Certificate of
Designation attached to this Agreement as Exhibit A.
(s) "Purchase Price" shall have the meaning set forth in Section
4 hereof.
(t) "Record Date" shall have the meaning set forth in the second
paragraph at the beginning of this Agreement.
(u) "Redemption Date" shall have the meaning set forth in Section
7 hereof.
(v) "Redemption Price" shall have the meaning set forth in
Section 23 hereof.
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(w) "Right" shall have the meaning set forth in the second
paragraph at the beginning of this Agreement.
(x) "Right Certificate" shall have the meaning set forth in
Section 3 hereof.
(y) "Rights Agent" shall have the meaning set forth in the first
paragraph at the beginning of this Agreement.
(z) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(aa) "Shares Acquisition Date" shall mean the earlier of (i) the
first date of public announcement (which, for purposes of this definition, shall
include, without limitation, 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, or (ii) the date on which a majority of the Continuing Directors,
in good faith, informs the Company by written notice of the existence of an
Acquiring Person.
(bb) "Spread" shall have the meaning set forth in Section
11(a)(iv) hereof.
(cc) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(dd) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iv) hereof.
(ee) "Summary of Rights" shall have the meaning set forth in
Section 3 hereof.
(ff) "Trading Day" shall have the meaning set forth in Section 11
hereof.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall, prior to the
Distribution Date, also be the holders of Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth
Business Day (or such later date as the Board of Directors shall determine upon
the affirmative vote of a majority of the Continuing Directors then in office)
after the Shares Acquisition Date or (ii) the tenth Business Day (or such later
date as the Board of Directors shall determine, upon the affirmative vote of a
majority of the Continuing Directors then in office) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any Person holding Common Shares for or pursuant to the terms of any
such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any
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employee benefit plan of the Company or of any Subsidiary of the Company or any
Person holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares (the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the Right Certificates will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will notify the Rights Agent thereof and the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held, subject to adjustment as
provided for herein. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) Unless the Board of Directors by resolution adopted at or
before the time of issuance of any Common Shares specifies to the contrary,
Rights shall be issued in respect of all Common Shares that are issued after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date. Certificates representing such Common Shares
shall also be deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Amended and Restated Rights
Agreement between CorVel Corporation and U.S. Stock Transfer
Corporation dated as of April 11, 2002 (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 CorVel Corporation. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. CorVel Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
issued to any Person who is, was or becomes an Acquiring Person
(or any Affiliate or Associate thereof) (as defined in the Rights
Agreement), whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date, or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender
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for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby. In the event that
the Company purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of assignment,
certification and election to purchase Preferred Shares to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates whenever distributed, shall be dated as of the Record Date
(or in the case of Rights issued with respect to Common Shares issued by the
Company after the Record Date, as of the date of issuance of such Common Stock)
and on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights Beneficially Owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 11(a)(ii) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in the Rights
Agreement.
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Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal, if any, or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company. Any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities or property) as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent with the form of certification and
assignment on the reverse side thereof duly endorsed (or enclosed with such
Right Certificate a written instrument of transfer in form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such signature duly
guaranteed. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
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cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and (in case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Sections 23(b) and 24(c) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on February 10, 2012 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof, or (iv) the consummation of any
merger or other acquisition involving the Company pursuant to an agreement
described in Section 1(c)(ii)(A)(2) hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share in connection with the exercise of a Right shall initially be $118, shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of certification and
election to purchase duly executed, accompanied by payment of the Purchase Price
for the number of one one-hundredths of a Preferred Share (or other security or
property, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
one one-hundredths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) requisition from a depositary agent properly appointed by the Company
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14
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hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate. In the case of a
purchase of securities, other than Preferred Shares, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (iv) of this Section 7(c). In the event that the Company is obligated to
issue other securities of the Company, and/or distribute other property or
consideration as provided for herein, the Company shall make all arrangements
necessary so that such other securities, and/or property or other consideration
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the form of certification and election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of and to the extent of
its authorized and unissued shares of Preferred Stock not reserved for another
purpose, or any Preferred Shares held in its treasury (and, following the
occurrence of an event described in Section 11(a)(ii) or Section 13(a), out of
its authorized and unissued shares of Common Stock and/or other securities), the
number of
12
Preferred Shares (and, following the occurrence of any such event, Common Stock
and/or other securities) that will be sufficient to permit the exercise in full
of all outstanding Rights.
(b) If the Preferred Shares (or, following the occurrence of an
event described in Section 11(a)(ii) or Section 13(a), the Common Shares and/or
other securities) are at any time listed on a national securities exchange or
included for quotation on any transaction reporting system, then so long as the
Preferred Shares (and, following the occurrence of any such event described in
Section 11{a){ii) or Section 13(a), the Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be listed on such
exchange or included for quotation on any such transaction reporting system, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange or included for quotation on any such transaction
reporting system upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i} file, as soon
as practicable following the earliest date after the first occurrence of an
event described in Section 11(a)(ii) in which the consideration to be delivered
by the Company upon exercise of the Rights has been determined in accordance
with Section 11(a)(iv) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities or (B)
the date of expiration of the Rights. The Company may temporarily suspend, for a
period not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating, and notify the Rights Agent, that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement and
notification to the Rights Agent at such time as the suspension is no longer in
effect. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained, or an exemption therefrom shall be available and until
a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Right Certificates or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which
13
may be payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or to
issue or to deliver any certificates or depositary receipts for Preferred Shares
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price therefor (and any applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
then, in each such event, except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares issuable upon the exercise of such Rights, shall
be proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in
14
this Section 11(a)(i) shall be in addition to, and shall be made prior to any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event
that any Person becomes an Acquiring Person, each holder of a Right
shall thereafter have the right to receive for each Right, upon exercise
thereof, at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of a number of one one-hundredths of a Preferred
Share, such number of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable and dividing that product by (y) 50% of the then
Current Per Share Market Price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of an event in which any Person shall become an
Acquiring Person, any Rights beneficially owned by (A) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (B) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (C) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (1) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) a transfer
which the Board of Directors, upon the affirmative vote of a majority of the
Continuing Directors, has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 11(a)(ii), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof or to any nominee
or agent of such Acquiring Person, Associate or Affiliate; no Right Certificate
shall be issued at any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee or agent of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
15
(iii) The right to buy Common Shares of the Company
pursuant to Section 11(a)(ii) hereof, (a) shall not arise if the event
causing such Person to become an Acquiring Person (A) is a
consolidation, merger, sale, transfer or similar transaction subject to
Section 13 hereof, or (B) is an acquisition of shares of Common Shares
pursuant to a tender offer or an exchange offer for all outstanding
Common Shares at a price and on terms determined by the Board of
Directors, upon the affirmative vote of a majority of the Continuing
Directors, and after receiving advice from one or more investment
banking firms, to be (1) at a price which is fair to stockholders
(taking into account all factors which such members of the Board of
Directors deem relevant including, without limitation, prices which
could reasonably be achieved if the Company or its assets were sold in
an orderly basis designed to realize maximum stockholder value) and (2)
otherwise in the best interests of the Company and its stockholders.
(iv) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if the Board of Directors of
the Company, upon the affirmative vote of a majority of the Continuing
Directors, determines that such action is necessary or appropriate and
not contrary to the interest of holders of Rights (and/or in the event
that the number of Common Shares which are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights, or if any
necessary regulatory approval for such issuance has not been obtained by
the Company), the Company shall: (A) determine the excess of (1) the
value of the Common Shares issuable upon the exercise of a Right
(determined as provided in the last sentence of this subclause (iv),
hereinafter referred to as the "Current Value") over (2) the Purchase
Price (such excess being referred to as the "Spread") and (B) with
respect to each Right, make adequate provision to substitute for such
Common Shares, upon exercise of the Rights, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the Company
(including, without limitation, shares or units of shares of any series
of preferred stock which the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, has deemed
to have the same value as Common Shares (such shares or units of shares
of preferred stock are herein called "Common Stock Equivalents")),
except to the extent the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such
issuance, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company, upon the affirmative vote of a majority of the Continuing
Directors, based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company, upon
the affirmative vote of a majority of the Continuing Directors;
provided, however, if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days
following the occurrence of an event described in Section 11(a)(ii),
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available), except to the extent that the
Company has not obtained any necessary stockholder or regulatory
approval for such issuance, and then, if necessary, cash, which shares
and/or cash have an
16
aggregate value equal to the Spread. If the Board of Directors of the
Company, upon the affirmative vote of a majority of the Continuing
Directors, shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance
upon exercise in full of the Rights or that any necessary regulatory
approval for such issuance will be obtained, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the occurrence of an event described in
Section 11(a)(ii), in order that the Company may seek stockholder
approval for the authorization of such additional shares or take action
to obtain such regulatory approval (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a}(iv), the Company (x) shall provide that
such action shall apply uniformly to all outstanding Rights held by
holders entitled to receive Common Shares or other securities or
property upon exercise of such Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares, to take
any action to obtain any required regulatory approval and/or to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in
effect and shall promptly notify the Rights Agent of such suspension.
For purposes of this Section 11(a)(iv), the value of the Common Shares
shall be the Current Per Share Market Price (as determined pursuant to
Section 11(d) hereof) of the Common Shares at the Close of Business on
the date of the occurrence of one of the events described in Section
11(a)(ii) and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Shares on such date.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within forty-five (45) calendar days after
such record date) to subscribe for or purchase Preferred Shares (or shares
having the same rights, privileges and preferences as the Preferred Shares
("Equivalent Preferred Shares")) or securities convertible into Preferred Shares
or Equivalent Preferred Shares at a price per Preferred Share or Equivalent
Preferred Share (or having a conversion price per share, if a security
convertible into Preferred Shares or Equivalent Preferred Shares) less than the
then Current Per Share Market Price of the Preferred Shares (as defined in
Section 11(d)) on such record date, then, in each such case, the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or Equivalent
Preferred Shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of additional Preferred
Shares and/or Equivalent Preferred Shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
17
Directors of the Company, upon the affirmative vote of a majority of the
Continuing Directors, 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. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b} hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then Current Per Share Market Price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, upon the affirmative vote of a majority of
the Continuing Directors, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
Current Per Share Market Price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the Preferred Shares. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i} For the purpose of any computation hereunder, the
"Current Per Share Market Price" of any security on any date shall be deemed to
be the average of the daily closing prices per share of such security for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Current Per Share Market Price of the security is determined during a period
following the announcement by the Issuer of such security of (A) a dividend or
distribution on such security payable in shares of such security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such security and prior to the expiration of thirty (30)
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
security. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the Nasdaq National Market ("Nasdaq"), if the
security is not listed or admitted to trading on the Nasdaq, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the security is
listed or admitted to trading or, if
18
the security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq or such other system then in use, or, if on any such date the security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
security selected by the Board of Directors of the Company, upon approval by a
majority of the Continuing Directors. If on any such date no market maker is
making a market in the security, the "Current Per Share Market Price" of such
security on such date as determined in good faith by the Board of Directors of
the Company as provided for above shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
security is listed or admitted to trading is open for the transaction of
business or, if the security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i).
If the Preferred Shares are not publicly traded, the "Current Per Share
Market Price" of the Preferred Shares shall be conclusively deemed to be
the Current Per Share Market Price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the
date hereof), multiplied by 100. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "Current Per
Share Market Price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e} are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
19
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations 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 Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase 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 Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11{i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
20
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the par value, if any, of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the. Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
21
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof. Notwithstanding the foregoing sentence, the failure by the Company to
make such certification or give such notice shall not affect the validity of or
the force or effect of the requirement for such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment contained therein and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) Except as provided in Section 13(b) hereof, in the event,
directly or indirectly, (1) the Company shall consolidate with, or merge with
and into, any other Person, (2) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other Person (or
the Company) or cash or any other property, or (3) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, directly or indirectly, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (i) each holder of a Right
(except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of fully paid and
non-assessable Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation in any such consolidation,
merger, sale or transfer), free of any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then Current Per Share Market Price of the Common
Shares of such other Person (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; (ii) the
Issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Issuer; and (iv) such Issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares thereafter deliverable upon the exercise of the Rights, and
the Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such Issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or other arrangements of
any kind whatsoever which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits intended to be afforded
by the Rights. The
22
provisions of this Section 13 shall similarly apply to each successive merger,
consolidation, sale or transfer.
The supplemental agreement referred to above in this Section
13(a) to be entered into by the Company, Issuer and Rights Agreement shall also
provide that, as soon as practicable after the date of any of the events
described in Section 13(a), such Issuer shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the Final
Expiration Date, and similarly comply with applicable state securities
laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical
financial statements for such Issuer which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
(b) In the event of any merger or other acquisition transaction
involving the Company pursuant to an agreement described in Section
1(c)(ii)(A)(2), the provisions of Section 13(a) hereof shall not be applicable
to such transaction and this Rights Agreement and the rights of holders of
Rights hereunder shall be terminated in accordance with Section 7(a) hereof.
(c) The term "Issuer," for purposes of this Section 13, shall
refer to the Person (or the Affiliate or Associate of such Person) referred to
in Section 13(a); provided, however, that (i) if such Person (or the Affiliate
or Associate of such Person) is a direct or indirect Subsidiary of another
Person, the term "Issuer" shall refer to such other Person, and (ii) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the term "Issuer" shall refer to whichever of such Person or Persons is the
Issuer of Common Shares having the greatest aggregate value.
(d) If, for any reason, the Rights cannot be exercised for
Common Shares of such Issuer as provided in Section 13(a), then each holder of
Rights shall have the right to exchange its Rights (without payment of the
Purchase Price) for cash from such Issuer in an amount equal to the product of
(A) 1/2 of the number of Common Shares of the Issuer that it would otherwise be
entitled to purchase pursuant to Section 13(a) hereof multiplied by (B) the
Current Per Share Market Price, as determined pursuant to Section 11(d) hereof,
of such Common Shares of such Issuer. If, for any reason, the foregoing
provision cannot be applied to determine the cash amount into which the Rights
are exchangeable, then the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, based upon the
advice of one or more nationally recognized investment banking firms, shall
determine such
23
amount reasonably and in good faith. Any such determination shall be final and
binding on the Rights Agent and the holders of Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on Nasdaq or, if
the Rights are not listed or admitted to trading on Nasdaq, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company,
upon approval by a majority of the Continuing Directors, shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, however, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Preferred
Share. For the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
24
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations hereunder, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) subject to Sections 6 and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company 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 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,
25
however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The 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 and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
any action taken, suffered or omitted by the Rights Agent in connection with the
execution, acceptance and administration of this Agreement and the exercise and
performance hereunder of its duties, including the costs and expenses of
defending against and appealing any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement and the exercise and performance of
its duties hereunder in reliance upon any Right Certificate or certificate for
the Preferred Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Right Certificates shall have
26
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice
(who may be legal counsel for the Company), and the reasonable opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken, suffered or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the administration, exercise and 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, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the 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, suffered or omitted in good faith by
it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its
27
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the legality, validity or enforceability
or the execution of any Right Certificate (except its countersignature thereof);
nor shall it be liable or responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3,11,13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after receipt
of the certificate described in Section 12 hereof); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary or the Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be responsible or liable for any
action taken, suffered or omitted by it in good faith in accordance with
instructions of any such officer or for an delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually received such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or
28
agents, and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that the Rights evidenced by the Right Certificate are not owned by
an Acquiring Person, or an Affiliate or Associate thereof, has either not been
completed or in any manner indicates any other response thereto, the Rights
Agent shall not take any further action with respect to such requested exercise,
transfer, split up, combination or exchange, without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares (as to which the
Rights Agent has received prior written notice) by registered or certified mail,
and the Company shall mail notice thereof to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares or Preferred Shares (as to which the Rights Agent has
received prior written notice) by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (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
Right Certificate (who shall, with such notice, submit such holder's Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States so long as such corporation is authorized to do business as a banking
institution, is in good standing, and is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of
29
any such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors, upon the affirmative
vote of a majority of the Continuing Directors, to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee benefit plan or arrangement or upon the exercise,
conversion or exchange of securities of the Company currently outstanding or
issued at any time in the future by the Company and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
upon the affirmative vote of a majority of the Continuing Directors, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Right Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Company may, at its option, upon the affirmative vote of
a majority of the Continuing Directors, at any time prior to the Close of
Business on the earlier of (i) the tenth day following the Shares Acquisition
Date or such later date as may be determined by the affirmative vote of a
majority of the Continuing Directors and publicly announced by the Company, or
(ii) the Final Expiration Date, redeem all but not less than all 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"), and the Company may, at its option, pay
the Redemption Price either in cash, Common Shares (based on the Current Per
Share Market Price thereof (as determined pursuant to Section 11(d) hereof) at
the time of redemption), or any other form of consideration deemed appropriate
by the Board of Directors, upon the affirmative vote of a majority of Continuing
Directors. The redemption of the Rights by the Board of Directors may be made
effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish; provided, however, if the Board
of Directors of the Company authorizes redemption of the Rights on or after the
time a Person becomes an
30
Acquiring Person, then there must be Continuing Directors then in office and
such authorization shall require the concurrence of a majority of such
Continuing Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. 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 ten calendar (10) days after such action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the 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 Common Shares prior to the Distribution
Date.
Section 24. Exchange.
(a) Notwithstanding any other provision herein to the contrary,
the Company, at its option, upon the affirmative vote of a majority of the
Continuing Directors, at any time after any Person becomes an Acquiring Person,
may exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for (i) Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (the "Exchange
Shares") or (ii) Substitute Consideration (as that term is defined below). The
Board of Directors, upon the affirmative vote of a majority of the Continuing
Directors may determine, in its sole discretion, whether to deliver Exchange
Shares or Substitute Consideration.
(b) In the event the Board of Directors shall determine to
deliver Substitute Consideration in exchange for Rights, the Company shall (1)
determine the value of the Exchange Shares (the "Exchange Value"), and (2) with
respect to each Right to be exchanged, make adequate provision to substitute for
Exchange Shares the following (the "Substitute Consideration"): (v) cash, (w)
Common Stock or Common Stock Equivalents (as that term is defined in Section
11(a)(iii) hereof) or Preferred Shares or Equivalent Preferred Stock (as that
term is defined in Section 11(b) hereof), (x) debt securities of the Company,
(y) other assets, or (z) any combination of the foregoing, having an aggregate
value equal to the Exchange Value, where such aggregate value has been
determined by the Board of Directors of the Company, upon the affirmative vote
of a majority of the Continuing Directors based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. For purposes of this Section 24(b), the value of the Common Shares
shall be the Current Per Share Market Price (as determined pursuant to Section
11(d) hereof) on the day that
31
is the later of (x) the first occurrence of an event described in Section
11(a)(ii) hereof and (y) the date on which the Company's right of redemption
pursuant to Section 24(a) expires; and the value of any Common Stock Equivalent
shall be deemed to have the same value as the Common Shares on such date.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to this Section 24, and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive Exchange Shares or Substitute Consideration for each Right
exchanged by such holder. 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 promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last address 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 Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock or Preferred Stock for issuance upon
exchange of the Rights. Notwithstanding anything else set forth in this Section
24, the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares of the Company then outstanding.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (e), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
(f) The Company may, at its option, by majority vote of the Board
of Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined
32
reasonably and in good faith by the Board of Directors, based upon the advice of
one or more nationally recognized investment banking firms.
(g) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection (f) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection (f)
above. The Company shall 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 mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Shares
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 exchange will state the method by which the exchange of the Rights will be
effected.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least ten (10)
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action referred
to above, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which
33
notice shall describe such event and the consequences of such event to holders
of Rights under Section 11 (a)(ii) hereof. In the event any Person becomes an
Acquiring Person, the Company will promptly notify the Rights Agent thereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
CorVel Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: V. Xxxxxx Xxxxxxx
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: 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 Right Certificate 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 Distribution
Date, the Company may supplement or amend this Agreement in any respect,
including, without limitation, any amendment to change the Purchase Price,
without the approval of any holders of Rights, by action of its Board of
Directors upon approval by a majority of the Continuing Directors, and the
Rights Agent shall, if the Company so directs, execute such supplement or
amendment. From and after the Distribution Date, the Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights, by action of its Board of Directors, upon the affirmative vote of a
majority of the Continuing Directors, in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to change or supplement any
other provisions with respect to the Rights 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 of Directors in adopting this Agreement,
including, without limitation, to change the Purchase Price, the Redemption
Price, any time periods herein specified, and any other term hereof, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after the Distribution Date,
this Agreement shall not be amended in any manner which would adversely affect
the interests of the holders of
34
Rights. Upon receipt of a certificate from an appropriate officer of the Company
that the proposed supplement or amendment is consistent with this Section 27
and, after the Distribution Date, that the proposed supplement or amendment does
not adversely affect the interests of the holders of Rights, the Rights Agent
shall execute such supplement or amendment. Without limiting the foregoing, the
Company may at any time prior to the Distribution Date, by action of its Board
of Directors, upon the affirmative vote of a majority of the Continuing
Directors, amend this Agreement to lower the thresholds set forth in Sections
1(a) and 3(a) to not less than the greater of (i) any percentage greater than
the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, any entity holding Common Shares for or pursuant to
the terms of any such plan, or Americable) and (ii) 10%.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company (and, where specifically provided for
herein, only upon the affirmative vote of a majority of the Continuing
Directors) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing), which are done or made by the Board (or, where specifically provided
for herein, upon approval by a majority of the Continuing Directors) in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Right Certificates, and all other parties and (y) not
subject the Board or the Continuing Directors to any liability to the holders of
the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 31. Sever 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
35
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything in
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company, upon the affirmative
vote of a majority of the Continuing Directors, determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
tenth business day following the date of such determination by the Board of
Directors of the Company.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted or convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the day and year first above
written.
U.S. STOCK TRANSFER CORPORATION: CORVEL CORPORATION
By /s/ XXXXXXX X. XXXXX By /s/ V. XXXXXX XXXXXXX
-------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxx Name: V. Xxxxxx Xxxxxxx
Title: Vice President Title: Chairman, Chief Executive
Officer and President
ATTEST:
By /s/ XXXXX X. CLAYS By /s/ XXXXXXX XXXXXXXX
-------------------------------- --------------------------------
Name: Xxxxx X. Clays Name: Xxxxxxx Xxxxxxxx
Title: Assistant Vice President Title: Chief Financial Officer
37
EXHIBIT A-1
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CORVEL CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
--------------------
CorVel Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted at a
meeting of the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law on February 11,1997:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $0.0001 per share (the "Preferred Stock"), of the Corporation
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock" and the number of shares initially constituting the,
Series A Preferred Stock shall be 60,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock in
preference to the holders of shares of the Common Stock, par value
$0.0001 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of
a share or fraction of a share of Series A Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (i)
$1.00 in cash, or (ii) subject to the provision for adjustment
hereinafter set forth, 140 times the aggregate per share amount of all
cash dividends, and 140 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event the Corporation shall at
any time after February 28, 1997 (the "Declaration Date"), declare or
pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the preceding subclause (ii} shall
be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in share's of Common
Stock); provided that, if no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next succeeding Quarterly Dividend Payment
Date, a dividend of $1.00 per share payable in cash on the Series A
Preferred Stock shall nevertheless accrue and be cumulative on the
outstanding shares of Series A Preferred Stock as provided in (C) of
this Section 2.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth; each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time after the Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision
or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares
of Common Stock, then in each such case the number of votes per share to
which holders of, shares, of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding, immediately prior to such event.
(B) Except as otherwise provided herein in any other Certificate
of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided bylaw;
holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a
share or fraction of a share of Series A Preferred Stock unless
concurrently therewith it shall declare a dividend on the Series A
Preferred Stock as required by Section 2 hereof.
(B) whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any,
shares of stock ranking on a parity, with the Series A Preferred
Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or
classes,
(C) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any, manner,
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation. Dissolution or Winding Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or as to amounts payable upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless, prior thereto, the holder's of shares of
Series A Preferred Stock shall have received an amount per share (rounded to the
nearest cent) equal to the greater of (i) $100 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, plus an amount equal to accrued and unpaid dividends and distributions on
the Series A Preferred Stock whether or not declared, to the date of such
payment or (B) to the holders of shares of stock ranking on a parity (either as
to dividends or as to amounts payable upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A)(ii) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 tunes the aggregate amount of stock,
securities, cash and/or any, other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare after the Declaration
Date or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock, unless the
terms of such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change, the powers, preferences or special rights of the Series. A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series A
Preferred Stock, voting together as a single class:
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation on this day of February 28, 1997.
----------------------------------------
Name: X. Xxxxxx Clelnons
Title: Chief Executive Officer and
President
ATTEST:
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
EXHIBIT A-2
CORVEL CORPORATION
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF DESIGNATION OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS OF SUCH PREFERRED STOCK
OF CORVEL CORPORATION, AS AMENDED
----------
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
----------
CorVel Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), by its
Chairman, Chief Executive Officer and President, DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the corporation is CorVel Corporation (the
"Corporation").
2. The date of filing of the Corporation's original Certificate
of Incorporation was May 16,1991.
3. The date of filing of the Corporation's original Certificate
of Designation was February 28, 1997.
4. The following resolutions were adopted by the Corporation's
Board of Directors at a telephonic meeting of the Board on April 11, 2002,
pursuant to the authority vested in the Board of Directors, and that said
resolutions are still in full force and effect:
RESOLVED FURTHER, that the number of shares of Series A Junior
Participating Preferred Stock set forth in the Corporation's Certificate of
Designation filed on February 28, 1997 be increased from 60,000 to 200,000.
5. No shares of the Corporation's Series A Junior Participating
Preferred Stock have been issued.
6. Pursuant to these resolutions, the number of shares of
Preferred Stock designated as "Series A Junior Participating Preferred Stock" is
Two Hundred Thousand (200,000) shares.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed as of the 9th day of May, 2002.
CORVEL CORPORATION
By: /s/ V. XXXXXX XXXXXXX
-----------------------------------
Name: V. Xxxxxx Xxxxxxx
Title: Chairman, Chief Executive
Officer and President
2
Exhibit B
Form of Right Certificate, As Amended
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 10, 2012 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE
OPTION OF THE COMPANY AT $0.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE AMENDED AND RESTATED PREFERRED SHARES
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SUCH AGREEMENT.]*
Right Certificate
CORVEL CORPORATION
This certifies that or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Amended and
Restated Preferred Shares Rights Agreement, dated as of April 11, 2002 (the
"Rights Agreement"), between CorVel Corporation, a Delaware corporation (the
"Company"), and U.S. Stock Transfer Corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., Irvine, California
time, on February 10, 2012, at the principal office of the Rights Agent
designated for such purpose, or at the office of
----------
* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $0.0001 per
share (the "Preferred Shares") of the Company, at a purchase price of $118 per
one one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of April 10, 2002, based on the Preferred
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the principal office of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company, at its option,
at a redemption price of $0.01 per Right or (ii) may be exchanged by the Company
in whole or in part for Preferred Shares, shares of the Company's Common Stock,
or substantially equivalent rights or other consideration as determined by the
Company.
No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the 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
2
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and
its corporate seal. Dated as of May 9, 2002.
[SEAL]
ATTEST: CORVEL CORPORATION
By: By:
------------------------------ ------------------------------
Its: Chief Financial Officer Its: Chief Executive Officer and
------------------------------ ------------------------------
President
------------------------------
Countersigned:
, as Rights Agent
-----------------------------------
By:
------------------------------
Authorized Signature
Its:
------------------------------
Title
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________ hereby sells, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
-------------------
----------------------------------------
Signature
Signature Guaranteed:
Signatures 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.
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------------
Signature
Form of Reverse Side of Right Certificate -- continued
4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To CORVEL CORPORATION
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security or other identifying number: _____________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number: _____________________
(Please print name and address)
Dated:
-------------------
----------------------------------------
Signature
Signature Guaranteed:
Signatures 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.
Form of Reverse Side of Right Certificate -- continued
5
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------------
Signature
NOTICE
The signature in the foregoing Forms of Assignment and Election to
Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
6
Exhibit C
CORVEL CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES, AS AMENDED
The Board of Directors of CorVel Corporation (the "Company") heretofore
declared a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock, par value $0.0001 per share (the "Common Shares"), of the
Company outstanding as of the close of business on February 28, 1997 (the
"Record Date"). Subsequently, on April 11, 2002, the Board of Directors of the
Company determined that it was in the best interests of the Company and its
stockholders to make certain modifications to the terms and conditions of the
Rights. The description and terms of the Rights are set forth in an Amended and
Restated Preferred Shares Rights Agreement dated as of April 11, 2002 (the
"Rights Agreement") between the Company and U.S. Stock Transfer Corporation, as
Rights Agent (the "Rights Agent") and are summarized below.
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $0.0001 per share (the "Preferred Shares"), of the Company at a price
of $118 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment.
Until the earlier to occur of (i) 10 days following the date of public
announcement by the Company or an Acquiring Person that any person or group of
affiliated or associated persons have become an Acquiring Person, (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person (as such
term is defined below)) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of associated
persons of 15% or more of the Company's outstanding Common Shares, or (iii) 10
days following the date on which a majority of the Continuing Directors (as such
term is defined in the Rights Agreement), in good faith, informs the Company by
written notice of the existence of an Acquiring Person (the earliest of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this Summary of Rights
attached thereto.
"Acquiring Person" shall mean any person who or which, together with all
affiliates and associates of such person is the Beneficial Owner of 15% or more
of the Common Shares of the Company then outstanding, but shall not include (i)
the Company, any subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any person holding Common Shares
for or pursuant to the terms of any such plan, (ii) Americable, Inc., a
Minnesota corporation ("Americable") and wholly-owned subsidiary of ENStar,
Inc., a Minnesota corporation ("ENStar") or any affiliate and associate of
Americable including ENStar (but only to the extent that Americable and its
associates and affiliates beneficially own less than 33% of the Common Shares of
the Company); (iii) Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp., together with all
Affiliates and Associates (collectively, "Fidelity"), but only to the extent
that Fidelity and its associates and affiliates beneficially own less than 18%
of the Common Shares of the Company; or (iv) any person, together with all
affiliates and associates of such person, who or which would be an Acquiring
Person solely by reason of (A) being the beneficial owner of Common Shares, the
beneficial ownership of which was acquired by such person (and the affiliates
and associates of such person) pursuant to any action or transaction, or series
of related actions or transactions, approved by the Board of Directors of the
Company, upon the affirmative vote of a majority of the Continuing Directors,
prior to the earlier to occur of (1) the Distribution Date or (2) any exchange
made pursuant to the Rights Agreement, or (B), a reduction in the number of
issued and outstanding Common Shares pursuant to a transaction or series of
related transactions approved by the Board of Directors, upon the affirmative
vote of a majority of the Continuing Directors; provided further that in the
event that such person described in clause (iii) above does not become an
Acquiring Person by reason of clause (A) or (B), such person nonetheless shall
become an Acquiring Person in the event such person, together with all
affiliates and associates of such person, thereafter acquires beneficial
ownership of any additional Common Shares unless the acquisition of such
beneficial ownership would not result in such person becoming an Acquiring
Person by reason of subclause (A) or (B) of clause (iii) above. Notwithstanding
the foregoing, if the Board of Directors of the Company determines (upon the
affirmative vote of a majority of the Continuing Directors) in good faith that a
person who would otherwise be an Acquiring Person is eligible to file and did
file a Schedule 13G and such person divests (and/or causes such person's
affiliates and/or associates to divest) as promptly as practicable a sufficient
number of Common Shares so that such person would no longer be an Acquiring
Person as defined pursuant to the foregoing provisions, then such person shall
not be deemed to be an "Acquiring Person" for purposes of the Rights Agreement.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new issuance of
Common Shares, will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares,
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the Close of Business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 10, 2012 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable upon exercise of, or in exchange for, the Rights
are subject to adjustment from time to time to prevent dilution in the event of
a stock dividend on, or a
2
subdivision, combination or reclassification of, the Preferred Shares. The
number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to receive on the last day of
March, June, September and December an amount per share (rounded to the nearest
cent) equal to the greater of (i) $1.00 in cash or (ii) an aggregate dividend of
100 times the dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to receive an amount per
share equal to the greater of (i) $100 per share or (ii) an aggregate payment of
100 times the payment made per Common Share. Each Preferred Share will have 100
votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each Preferred Share will be entitled to receive 100 times the amount received
per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with any person
or an affiliate thereof, or 50% or more of its consolidated assets or earning
power are sold to any person or an affiliate thereof, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon exercise thereof at the then current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the Purchase Price of the
Right.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares of the Company (or cash, other securities
or property) having a market value of two times the Purchase Price of the Right.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Company may, upon the affirmative vote of a
majority of the Continuing Directors, exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part for
Common Shares, Preferred Shares or other consideration (or fractions or
combinations thereof), at an exchange ratio of one Common Share per Right
(subject to adjustment).
3
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts), and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the earliest of (i) the expiration of 10 business
days following the Shares Acquisition Date (as such term is defined in the
Rights Agreement) (or such later publicly announced date determined by the
affirmative vote of a majority of the Continuing Directors) or (ii) the Final
Expiration Date, the Company may, upon the affirmative vote of a majority of the
Continuing Directors, redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"). The redemption of the rights may be
made effective at such time on such basis and with such conditions as the Board,
upon the affirmative vote of a majority of the Continuing Directors, in its sole
discretion may establish. 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. The Rights are also redeemable
under other circumstances as specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights upon the affirmative
vote a majority of the Continuing Directors, including an amendment to lower
certain thresholds. From and after such time as any person becomes an Acquiring
Person, no such amendment may adversely affect the interests of the holders of
the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, no right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to an amendment to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available to holders of a Common
Share free of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by reference.
4
