Exhibit 4.1
SECOND AMENDMENT TO RIGHTS AGREEMENT
This SECOND AMENDMENT TO RIGHTS AGREEMENT (this "Amendment"),
adopted by the board of directors of Health Net, Inc., a Delaware corporation
(f/k/a Foundation Health Systems, Inc. f/k/a Health Systems International,
Inc.) (the "Company"), on May 3, 2001 and dated as of May 3, 2001, is by and
among the Company, Xxxxxx Trust and Savings Bank, an Illinois banking
corporation ("Xxxxxx Bank"), and Computershare Investor Services, L.L.C., a
Delaware limited liability company ("Computershare"). Capitalized terms not
otherwise defined in this Amendment shall have the meanings set forth in the
Rights Agreement.
RECITALS
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WHEREAS, the Company and Xxxxxx Bank are parties to a
Rights Agreement dated as of June 1, 1996 and amended as of October 1, 1996
(as so amended, the "Rights Agreement");
WHEREAS, under the Rights Agreement, Xxxxxx Bank is appointed as the
"Rights Agent" as defined therein;
WHEREAS, Xxxxxx Bank has transferred certain of its operations to
Computershare;
WHEREAS, the parties hereto now desire that Computershare be appointed
Rights Agent under the Rights Agreement;
WHEREAS, the Company deems it advisable to amend the Rights
Agreement to reflect the appointment of Computershare as Rights Agent and in
certain other respects; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board
of Directors of the Company has determined that an amendment to the Rights
Agreement as set forth herein is necessary and desirable, and the Company and
the other parties hereto desire to evidence such amendment in writing.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. APPOINTMENT OF SUBSTITUTE RIGHTS AGENT.
The Company hereby appoints Computershare to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3 of the Rights
Agreement, shall, prior to the Distribution Date, also be the holders of the
Common Stock and the Class B Common Stock) in accordance with the terms and
conditions hereof, and Computershare hereby accepts such appointment to serve
as Rights Agent. The appointment of Computershare as Rights Agent is deemed
effective as of May 3, 2001 (the "Effective Date"). As of the Effective Date,
all references in the Rights Agreement to "Rights Agent" shall be deemed to
refer to Computershare, Xxxxxx Bank shall no longer be the Rights Agent and
Computershare shall be fully responsible for all responsibilities and
obligations of Rights Agent under the Rights Agreement.
2. AMENDMENT OF SECTION 1(a). Section 1(a) of the
Rights Agreement is hereby amended by deleting such section and inserting in
lieu thereof the following:
"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 shares of Common Stock then outstanding,
but shall not include (i) the Company; (ii) any Subsidiary of the
Company; (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company; (iv) any Person organized, appointed or
established by the Company for or pursuant to the terms of any such
plan; (v) any Passive Institutional Investor who or which is the
Beneficial Owner of less than 17.5% of the shares of Common Stock then
outstanding; or (vi) any such Person who or which has reported or is
required to report such ownership (but less than 25% of the shares of
Common Stock then outstanding) on Schedule 13G under the Exchange Act
(as defined below) (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor
report) which Schedule 13D does not state any intention to or reserve
the right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of such
Schedule (other than the disposition of the Common Stock) and, within
10 Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired
shares of Common Stock in excess of 14.9% (or, if such Person is a
Passive Institutional Investor, 17.4%) of the shares of Common Stock
then outstanding inadvertently or without knowledge of the terms of
the Rights and who or which, together with all Affiliates and
Associates, thereafter does not acquire additional shares of Common
Stock while the Beneficial Owner of 15% or more (or, in the case of a
Passive Institutional Investor, 17.5% or more) of the shares of Common
Stock then outstanding; provided, however, that if the Person
requested to so certify fails to do so within 10 Business Days,
then such Person shall become
an Acquiring Person immediately after such 10 Business Day period.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" solely as the result of (i) an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by a
Person to 15% or more (or, in the case of a Passive Institutional
Investor, 17.5% or more) of the shares of Common Stock then
outstanding as determined above or (ii) the acquisition by such
Person of newly-issued Common Stock directly from the Company (it
being understood that a purchase from an underwriter or other
intermediary is not directly from the Company); provided, however,
that if a Person becomes the Beneficial Owner of 15% or more
(or, in the case of a Passive Institutional Investor, 17.5% or more) of
the shares of Common Stock then outstanding (as determined above)
solely by reason of purchases of Common Stock by the Company or the
receipt of newly-issued Common Stock directly from the Company and
shall, after such purchases or direct issuance by the Company, become
the Beneficial Owner of any additional shares of Common Stock by any
means whatsoever, then such Person shall be deemed to be an "Acquiring
Person"; provided further, however, that any transferee from such
Person who or which becomes the Beneficial Owner of 15% or more (or, if
such transferee is a Passive Institutional Investor, 17.5% or more) of
the shares of Common Stock then outstanding shall nevertheless be
deemed to be an "Acquiring Person." The Common Stock issued to and
received by stockholders of Foundation Health Corporation ("FHC")
pursuant to the Agreement and Plan of Merger, dated October 1, 1996
(the "Merger Agreement"), among the Company, FH Acquisition Corp. and
FHC shall be deemed to have been acquired directly from the Company as
contemplated by clause (ii) of the second sentence of this Section 1(a)
and shall be subject to all other terms of this Section 1(a).
3. AMENDMENT OF SECTION 1(b). Section 1(b) of the
Rights Agreement is hereby amended by deleting such section and inserting in
lieu thereof the following:
"Adverse Person" shall mean any Person declared to be an Adverse Person
by the Board of Directors upon determination that the criteria set
forth in Section 11(a)(ii)(B) apply to such Person; provided, however,
that the Board of Directors shall not declare any Person who is the
Beneficial Owner of 10% or more of the outstanding Common Stock of the
Company to be an Adverse Person if such Person has reported or is
required to report such ownership on Schedule 13G under the Exchange
Act (or any comparable or successor report) or on Schedule 13D under
the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to
or reserve the right to control or influence the management or policies
of the Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the Common Stock) so long
as such Person neither reports nor is required to report such ownership
other than as described in this Section 1(b).
4. ADDITION OF NEW SECTION 1(h). The following definition of
the term "Passive Institutional Investor" is hereby added to the Rights
Agreement as a new Section 1(h), and the existing Sections 1(h) through 1(n) are
hereby redesignated accordingly as Sections 1(i) through 1(o):
"Passive Institutional Investor" shall mean a Person who or which, as
of March 14, 2001, was the Beneficial Owner of shares of Common Stock
representing 15% or more of the shares of Common Stock then outstanding
and had a Schedule 13G on file with the Securities and Exchange
Commission pursuant to the requirements of Rule 13d-1 under the
Exchange Act with respect to such beneficial ownership, so long as such
Person either
(i) (A) is principally engaged in the business of managing
investment funds for unaffiliated securities investors
and, as part of such Person's duties as agent for fully
managed accounts, holds or exercises voting or
dispositive power over shares of Common Stock,
(B) became the Beneficial Owner of shares of Common
Stock pursuant to trading activities undertaken in the
ordinary course of such Person's business and not
(x) with the purpose or the effect, either alone or in
concert with any Person, of controlling or influencing
the management or policies of the Company or engaging
in any of the actions specified in Item 4 of
Schedule 13D under the Exchange Act as in
effect on March 14, 2001 (other than the disposition of
the Common Stock) or (y) in connection with or as a
participant in any transaction having a purpose or
effect described in the foregoing clause (x), including
any transaction subject to Rule 13d-3(b) under the
Exchange Act as in effect on March 14, 2001, and (C) if
such Person is a Person included in Rule
13d-1(b)(1)(ii) under the Exchange Act as in effect on
March 14, 2001, such Person is not obligated to, and
does not, file a Schedule 13D (or any comparable or
successor report) with respect to securities of the
Company; or
(ii) satisfies the criteria set forth in both Rule
13d-1(b)(1)(i) and Rule 13d-1(b)(1)(ii) under the
Exchange Act as in effect on March 14, 2001 and is not
obligated to, and does not, file a Schedule 13D (or any
comparable or successor report) with respect to
securities of the Company.
5. AMENDMENT OF SECTION 19(a). Section 19(a) of the Rights
Agreement is hereby amended by inserting immediately following each occurrence
of the word "corporation" the phrase ", trust company or limited liability
company (or similar form of entity)".
6. AMENDMENT OF SECTION 21. Section 21 of the Rights Agreement
is hereby amended by deleting such section (but not the accompanying descriptive
heading) and inserting in lieu thereof (immediately after such descriptive
heading) the following:
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 Stock, Class B Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights
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 Stock, Class B
Common Stock and Preferred Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment
within 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 Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation , trust company or limited liability company (or
similar form of entity) authorized to conduct business under the laws
of the United States or any state of the United States,
in good standing, having a principal office in any state of the
United States, which is authorized under such laws to exercise
corporate trust, fiduciary or shareholder services powers and is
subject to supervision or examination by federal or state authority.
After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Stock, Class B Common Stock and the Preferred Stock, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case may be.
7. AMENDMENT OF SECTION 26. Section 26 of the Rights
Agreement is hereby amended
(a) by deleting the address given for the Company and
inserting in lieu thereof the following:
Health Net, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
and
(b) by deleting the address given for the Rights Agent
and inserting in lieu thereof the following
Computershare Investor Services, L.L.C.
0 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
8. EFFECTIVENESS. This Amendment shall be deemed effective as
of the date first written above, as if executed on such date. Except as amended
hereby, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
9. GOVERNING LAW. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed entirely within
such State.
10. MISCELLANEOUS.
(a) This Amendment may be executed in any number of
counterparts, 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.
(b) If any provision, covenant or restriction of this
Amendment is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
[Signature page follows.]
EXECUTED under seal as of the date first set forth above.
Attest: HEALTH NET, INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx
Title: Corporate Attorney Title: Vice President
Attest: XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx Xxxxxx Name: Xxxxxx X. Xxxxx
Title: Administrative Assistant Title: Vice Chair
Attest: COMPUTERSHARE INVESTOR
SERVICES, L.L.C.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxx Name: Xxx X. Xxxxxx
Title: Relationship Manager Title: Group Manager
