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EXHIBIT 4.1
COVENTRY HEALTH CARE, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
---------------
RIGHTS AGREEMENT
DATED
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TABLE OF CONTENTS
Section 1. Certain Definitions.................................................................. 1
Section 2. Appointment of Rights Agent.......................................................... 5
Section 3. Issuance of Rights Certificates...................................................... 5
Section 4. Form of Rights Certificates.......................................................... 7
Section 5. Countersignature and Registration.................................................... 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............................. 9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights....................... 10
Section 8. Cancellation and Destruction of Rights Certificates.................................. 12
Section 9. Reservation and Availability of Common Stock......................................... 13
Section 10. Common Stock Record Date............................................................. 14
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of
Rights............................................................................... 15
Section 12. Certificate of Adjusted Exercise Price or Number of Shares........................... 21
Section 13. Merger or Sale or Transfer of Assets or Earning Power................................ 22
Section 14. Fractional Rights and Fractional Shares.............................................. 26
Section 15. Rights of Action..................................................................... 27
Section 16. Agreement of Rights Holders.......................................................... 27
Section 17. Rights Certificate Holder Not Deemed a Stockholder................................... 28
Section 18. Concerning the Rights Agent.......................................................... 28
Section 19. Merger or Change of Name of Rights Agent............................................. 29
Section 20. Duties of Rights Agent............................................................... 29
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Section 21. Change of Rights Agent............................................................... 32
Section 22. Issuance of New Rights Certificates.................................................. 32
Section 23. Redemption........................................................................... 33
Section 24. Exchange............................................................................. 34
Section 25. Notice of Certain Events............................................................. 35
Section 26. Notices.............................................................................. 36
Section 27. Supplements and Amendments........................................................... 37
Section 28. Determinations and Actions by the Board of Directors, etc............................ 38
Section 29. Successors........................................................................... 38
Section 30. Benefits of this Agreement........................................................... 38
Section 31. Severability......................................................................... 39
Section 32. Governing Law........................................................................ 39
Section 33. Counterparts......................................................................... 39
Section 34. Descriptive Headings................................................................. 40
Signatures............................................................................................. 40
Exhibit A. Form of Rights Certificate.......................................................... A-1
Exhibit B. Summary of Rights to Purchase Common Stock.......................................... B-1
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of the day of , 199 (the "Agreement"),
between Coventry Health Care, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
R E C I T A L S
WHEREAS, on , 199 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company (the "Board") authorized and declared a distribution
of one Right (as defined in Section 1 hereof) for each share of common stock,
$.01 par value ("Common Stock"), of the Company outstanding on the Record Date
(as defined in Section 1 hereof), subject to the execution of this Agreement and
to certain other conditions, and the issuance of one Right (as such number may
hereinafter be adjusted pursuant hereto) with respect to each share of Common
Stock issued (whether originally issued or delivered from the Company's
treasury) between the Record Date and the earlier of the Exercisability Date (as
defined in Section 3(a) hereof) or the Expiration Date (as defined in Section
7(a) hereof), each Right initially representing the right to purchase, upon the
terms and subject to the conditions hereinafter set forth, one tenth of one
share of Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means any Person which (or which, together with
all its Affiliates and Associates) shall be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding. Notwithstanding the foregoing,
(x) the term "Acquiring Person" shall not include the Company, any Subsidiary of
the Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary with respect to such plan acting in
such capacity; and (y) no Person shall become an "Acquiring Person" as the
result of (A) the acquisition of Common Stock (or other securities convertible
into shares of Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person (alone or together with all
Affiliates and Associates) to 15% or more of the shares of Common Stock then
outstanding; provided, however, that if a Person (together with its Affiliates
and Associates) becomes the Beneficial Owner of 15% or more of the Common Stock
then outstanding by reason of share purchases by the Company, and such Person
(or an Affiliate or
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Associate) subsequently becomes the Beneficial Owner of any additional Common
Stock, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding anything to the contrary in this Agreement,
(i) Warburg, Xxxxxx Ventures, L.P. (the "Purchaser") shall
not be deemed an "Acquiring Person" hereunder as a result of the
transactions contemplated by that certain Amended and Restated
Securities Purchase Agreement, dated as of April 2, 1997, by and among
the Company, the Purchaser and Franklin Capital Associates III L.P.
(the "Purchase Agreement") unless and until the Purchaser without the
prior written consent of the Board of Directors of the Company: (A)
shall become (or together with all its Affiliates and Associates shall
become) the Beneficial Owner of more than 30% of the shares of Common
Stock outstanding on a fully diluted basis; or (B) directly or
indirectly (or any of its Affiliates or Associates directly or
indirectly), commences or participates in a solicitation of proxies in
opposition to any written proposal to shareholders by the Company's
Board of Directors or in favor of any shareholder proposal opposed by
the Company's Board of Directors, or (ii) solicits or assists any third
party to make a tender or exchange offer to purchase any shares of
Common Stock or submit any written proposal to the Board of Directors
of the Company for a merger, share exchange (other than any exercise,
exchange or conversion of the shares pursuant to the Purchase
Agreement), acquisition of substantially all assets or similar
transaction involving the Company; provided, however, that the
provisions of this sentence apply only to the Purchaser and any
Affiliate or Associate of the Purchaser to whom the Purchaser may
transfer the shares of Common Stock or securities convertible into, or
exercisable for, shares of Common Stock acquired by the Purchaser; and
(ii) None of Principal Mutual Life Insurance Company, an Iowa
mutual life insurance company ("Mutual"), and any Affiliate or
Associate of Mutual shall be deemed an "Acquiring Person" hereunder for
so long as none of Mutual and any Affiliate or Associate thereof shall
have breached, in any material respect, any provision of Sections 1(a)
or 4 of that certain Shareholders' Agreement, dated as of [ ], 1998, by
and among Mutual, Principal Health Care, Inc. and the Company (the
"Shareholders' Agreement"), and, after the Shareholder Agreement shall
no longer be effective, until such time as Mutual and any of its
Affiliates or Associates shall Beneficially Own less than 15% of the
Common Stock.
(b) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) of which such Person or any of such Person's Affiliates
or Associates is considered to be a "beneficial owner" under Rule 13d-3
of the General Rules and Regulations under the Exchange Act (the
"Exchange Act Regulations") as in effect on the date hereof; provided,
however, that a Person shall not be deemed the "Beneficial
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Owner" of, or to "beneficially own," any security under this
subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in
response to a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act and the
Exchange Act Regulations, and (B) is not reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this paragraph (c)) or disposing of such securities
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities); or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise;
provided, however, that under this paragraph (c), a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (x) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (y) securities that may be issued upon
exercise of Rights at any time prior to the occurrence of a Triggering Event, or
(z) securities that may be issued upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to the Exercisability Date
or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding", when used with reference to a
person's Beneficial Ownership of securities of the Company, shall mean the
number of securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(d) "Board" has the meaning set forth in the Recitals.
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(e) "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in Nashville, Tennessee or Pittsburgh,
Pennsylvania are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date means 5:00 P.M., Pittsburgh,
Pennsylvania time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Pittsburgh, Pennsylvania time, on the next
succeeding Business Day.
(g) "common stock" of any Person other than the Company means such
Person's capital stock with the greatest voting power, or, if such Person shall
have no capital stock, the equity securities or other equity interest having
power to control or direct the management of such Person.
(h) "Common Stock" means the shares of common stock, $.01 par value, of
the Company or, in the event of a stock split or reverse stock split with
respect to such shares of Common Stock, the shares of Common Stock of the
Company resulting from such stock split or reverse stock split.
(i) "Continuing Director" means any Person who is a member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a nominee or
representative of an Acquiring Person or of an Acquiring Person's Affiliate or
Associate, and who (i) was a member of the Board prior to the date of this
Agreement, or (ii) becomes a member of the Board after the date of this
Agreement if such Person's nomination for election to the Board is recommended
or approved by a majority of the Continuing Directors.
(j) "Exercisability Date" has the meaning set forth in Section 3(a)
hereof.
(k) "Exercise Price" has the meaning set forth in Section 7(b) hereof.
(l) "Expiration Date" has the meaning set forth in Section 7(a) hereof.
(m) "Final Expiration Date" has the meaning set forth in Section 7(a)
hereof.
(n) "Interested Stockholder" means any Acquiring Person, any Affiliate
or Associate of an Acquiring Person, any other Person in which any such
Acquiring Person, Affiliate or Associate has an interest, or any other Person
acting directly or indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
(o) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(p) "Record Date" means February 7, 1996.
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(q) "Redemption Date" has the meaning set forth in Section 7(a) hereof.
(r) "Right" means one of the stock purchase rights created hereunder.
(s) "Rights Certificate" has the meaning set forth in Section 3(a)
hereof.
(t) "Rights Dividend Declaration Date" has the meaning set forth in the
Recitals.
(u) "Section 11(a)(ii) Event" means any event described in Section
11(a)(ii) hereof.
(v) "Section 13 Event" means any event described in clause (x), (y) or
(z) of Section 13(a) hereof.
(w) "Stock Acquisition Date" shall mean 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.
(x) "Subsidiary" means, with reference to any Person, any corporation
of which an amount of voting securities sufficient to elect at least a majority
of the directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
(y) "Triggering Event" means any Section 11(a)(ii) Event or any Section
13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company 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. Issuance of Rights Certificates.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the Stock
Acquisition Date, and
(ii) the Close of Business on such date as a majority of the
Board shall determine, which date shall follow the commencement of a
tender offer (as determined by reference to Rule 14d-2(a) under the
Exchange Act) or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries, or any trustee or fiduciary
with respect to such
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plan acting in such capacity), if upon consummation thereof such Person
would become an Acquiring Person (the earlier of (i) and (ii) above
being the "Exercisability Date"),
the Rights:
(x) will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for shares of Common Stock
registered in the names of the holders thereof as of and subsequent to
the Record Date (which certificates for shares of Common Stock shall be
deemed also to be certificates for Rights) and not by separate
certificates, and
(y) will be transferable only in connection with the transfer
of the underlying shares of Common Stock (including a transfer to the
Company).
As soon as practicable after the Exercisability Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of shares
of Common Stock as of the Close of Business on the Exercisability Date, at the
address of such holder shown on the records of the Company, a certificate for
Rights, substantially in the form of Exhibit A attached hereto (the "Rights
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Exercisability Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Common Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date at the address of such holder shown
on the records of the company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the earlier of the Exercisability Date,
the Expiration Date and the Final Expiration Date (as such terms are defined in
this Section 3 and in Section 7 hereof), the Rights will be evidenced by such
certificates for Common Stock registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the earlier of the
Exercisability Date, the Expiration Date and the Final Expiration Date, the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented thereby.
(c) Rights shall, without any further action, be issued in respect of
all shares of Common Stock which are issued (including any shares of Common
Stock held in treasury) after the Record Date but prior to the earlier of the
Exercisability Date and the Expiration Date.
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Certificates representing such shares of Common Stock issued after the Record
Date shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in the Rights Agreement between Coventry
Health Care, Inc. (the "Company") and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent") dated as of __________________ (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal office of the
stock transfer administration office of the Rights Agent. 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. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may become
null and void.
With respect to certificates representing shares of Common Stock (whether or not
such certificates include the foregoing legend), until the earlier of the
Exercisability Date and the Expiration Date, (i) the Rights associated with the
shares of Common Stock represented by such certificates shall be evidenced by
such certificates alone, (ii) registered holders of the shares of Common Stock
shall also be the registered holders of the associated Rights, and (iii) the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Common Stock and of assignment to be printed on the reverse thereof) each shall
be substantially in the form of Exhibit A attached hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements 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 any rule or regulation thereunder or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set forth therein
at the price per share set forth therein (the "Exercise Price"), but the amount
and type of securities, cash or other assets that may be acquired upon the
exercise of each Right and the Exercise Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights that are beneficially owned by:
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(i) an Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Affiliate or
Associate) to holders of equity interests therein, or to any Person
with whom such Acquiring Person (or Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock, or the Company, or (B) a
transfer which a majority of the Board has determined to be part of a
plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of Section 7(e) hereof,
shall, upon the written direction of a majority of the Board, contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any Rights Certificate.
Section 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer, President, any Vice
President, or Treasurer and shall be attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. The Rights Certificates shall be
countersigned by the Rights Agent, by manual signature of an authorized officer,
and no Rights Certificate shall be entitled to any benefit under this Agreement
or be valid for any purpose unless so countersigned. A Rights Certificate
bearing the manual or facsimile signatures of individuals who were the proper
officers of the Company at the actual date of execution of such Rights
Certificate shall bind the Company, notwithstanding that such individuals or any
of them ceased to hold such offices prior to the countersignature of such Rights
Certificate or did not hold such offices at the date of execution of this Rights
Agreement. Such countersignature upon any Rights Certificate shall be conclusive
evidence, and the only evidence, that such Rights Certificate has been duly
countersigned as required hereunder.
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(b) Following the Exercisability Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the name and address of each holder of a Rights Certificate,
the number of Rights evidenced on its face by each Rights Certificate, and the
certificate number and date of each Rights Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the Close of Business on the Exercisability Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined, or exchanged for another
Rights Certificate or Certificates entitling the registered holder to purchase
the number of shares of Common Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitle such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent and shall execute and surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment set forth on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
or former Beneficial Owner (or Affiliates or Associates thereof) of the Rights
represented by such Rights Certificate as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Sections 4(b),
7(e) and 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby, there shall be issued, in exchange for and upon cancellation of the
mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights; provided, however, that a new Rights Certificate
shall be issued only upon reimbursement to the Company or the Rights Agent (as
the case may be) of all reasonable expenses incidental thereto, if such
reimbursement is requested by the Company or the Rights Agent; and provided
further, that, in the case of loss, theft or destruction of a Rights
Certificate, a new Rights Certificate shall be issued only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such
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loss, theft or destruction and, if requested by the Company or the Rights Agent,
indemnity or security reasonably satisfactory to the Company or the Rights Agent
(as the case may be).
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) At any time after the Exercisability Date and prior to the earlier
of (i) the Close of Business on February 7, 2006 (the "Final Expiration Date"),
or (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date") (the earlier of (i) and (ii) being the
"Expiration Date"), the registered holder of any Rights Certificate may, subject
to the provisions of Section 7(e) hereof, exercise the Rights evidenced thereby
in whole or in part upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Exercise Price (as
hereinafter defined) for the number of shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one tenth of one share of Common Stock
upon exercise of the Rights initially shall be $80.00, subject to adjustment
from time to time as provided in the next sentence and in Sections 11 and 13(a)
hereof (such purchase price, as so adjusted, being the "Exercise Price"), and
shall be payable in accordance with paragraph (c) below. Anything in this
Agreement to the contrary notwithstanding, in the event that, at any time after
the date of this Agreement and prior to the Exercisability Date, the Company
shall (i) declare a dividend on the Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock; then, in
any such case, each share of Common Stock outstanding following such dividend,
subdivision, combination or reclassification shall continue to have a Right
associated therewith, and the Exercise Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Exercise Price immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or such a subdivision, combination or reclassification is effected.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment in the manner described below, with respect to each Right
so exercised, of the Exercise Price for the shares of Common Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) to be purchased thereby, and of an amount equal to any applicable
transfer tax required to be paid by the holder in accordance with Section 6
hereof or evidence satisfactory
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to the Company of payment of such tax), the Rights Agent shall, subject to
Section 20(j) hereof, thereupon promptly:
(i) requisition from the transfer agent for the Common Stock
certificates for such number of shares of Common Stock as are to be
purchased, and the Company will direct the transfer agent to comply
with such request;
(ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14
hereof;
(iii) after receipt of such Common Stock certificates, cause
the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be
designated by such holder; and
(iv) after receipt of such cash, if any, deliver the same to
or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The payment of the Exercise Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in
cash or by certified or bank check or bank draft payable to the order of the
Company.
(d) In the event of an exercise of the Rights by a holder pursuant to
Section 11(a)(ii) hereof, the Rights Agent shall return such Rights Certificate
to the registered holder thereof after imprinting, stamping, or otherwise
indicating thereon that the rights represented by such Rights Certificate no
longer include the rights provided by Section 11(a)(ii) of the Rights Agreement.
In addition, in the event that the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised (and, if some of the
Rights exercised were exercised pursuant to Section 11(a)(ii), indicating by
imprint, stamp or otherwise the number of Rights remaining which continue to
include rights provided by Section 11(a)(ii)) shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by any of the Persons described below shall be 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:
(i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person;
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(ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Affiliate or
Associate) to holders of equity interests therein, or to any Person
with whom such Acquiring Person (or Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock, or the Company, or (B) a
transfer which a majority of the Board has determined to be part of a
plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e).
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights or any other Person as a result of its failure
to make any determination under this Section 7(e) or such Section 4(b) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner or former Beneficial
Owner (or Affiliates or Associates thereof) of the Rights represented by such
Rights Certificate as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or, at the written request of the Company, shall destroy such canceled
Rights Certificates and, in such case, shall deliver a certificate of
destruction thereof to the Company.
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Section 9. Reservation and Availability of Common Stock.
(a) The Company shall (i) at all times prior to the Expiration Date
cause to be reserved and kept available out of its authorized and unissued
shares of Common Stock, or any authorized and issued shares of Common Stock held
in its treasury, the number of shares of Common Stock that, as provided in this
Agreement, including, without limitation, Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights; and (ii) at
all times following the occurrence of a Section 11(a)(ii) Event, shall so
reserve and keep available a sufficient number of any other securities that may
be required to permit the exercise in full of the Rights pursuant to this
Agreement.
(b) The Company shall use its best efforts:
(i) as soon as practicable following (A) the occurrence of a
Section 11(a)(ii) Event and a determination by the Company in
accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or (B) if so
required by law, the Exercisability Date, to file a registration
statement (the "Registration Statement") on an appropriate form under
the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities that may be acquired upon exercise of the
Rights;
(ii) to cause the Registration Statement to become effective
as soon as practicable after the date of such filing (such date being
the "Registration Date");
(iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements
of the Securities Act) until the earlier of (A) the date as of which
the Rights are no longer exercisable for the securities covered by the
Registration Statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration Date,
to take such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable
state securities or "blue sky" laws.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed ninety (90) days after the date set forth in
subclause (A) or (B), whichever applies, of clause (i) of the first sentence of
this Section 9(b) in order to prepare and file such Registration Statement and
permit it to become effective. Upon any such suspension of exercisability, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and, upon termination of such suspension,
the Company shall issue a public announcement stating that the suspension is no
longer in effect. In addition, if the Company shall determine that a
Registration Statement is required following the Exercisability Date, the
Company may temporarily suspend the exercisability of the Rights until such time
as such Registration Statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any
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jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law,
or a Registration Statement, as described above, shall not have been declared
effective.
(c) The Company shall take such action as may be necessary to ensure
that all shares of Common Stock (and, following the occurrence of a Triggering
Event, any other securities) that may be delivered upon exercise of Rights shall
be, at the time of delivery of the certificates for such securities, duly and
validly authorized and issued, and fully paid and nonassessable.
(d) So long as the shares of Common Stock (and, after the occurrence of
a Triggering Event, any other securities) issuable upon the exercise of the
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(e) The Company may pay or may require the Rights holder to pay any
documentary, stamp or transfer tax imposed in connection with the issuance or
delivery of the Rights Certificates or certificates for shares of Common Stock
(or, following the occurrence of a Triggering Event, any other securities or
other assets) upon the exercise of Rights. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock (or any other
securities, cash or assets, as the case may be) to or in the name of the
registered holder upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Common Stock Record Date.
Each Person in whose name any certificate for shares of Common Stock
(or, following the occurrence of a Triggering Event, other securities) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such shares of Common Stock or other securities represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Common
Stock (or other securities) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such securities on,
and such certificate shall be dated as of, the next succeeding Business Day on
which the Common Stock (or other securities) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to securities 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.
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Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights.
The Exercise Price, the number and kind of securities covered by each
Right, and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event that the Company, at any time after the
date of this Agreement, shall (A) declare a dividend on the Common
Stock payable in shares of Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine the outstanding Common Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a share exchange or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Exercise 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 of Common Stock or
other capital stock, as the case may be, issuable on such date upon
exercise of the Rights, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Exercise Price then in effect, the
aggregate number and kind of shares of Common Stock or other capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that
if the record date for any such dividend, subdivision, combination or
reclassification shall occur prior to the Exercisability Date, the
Company shall make an appropriate adjustment to the Exercise Price in
lieu of adjusting (as described above) the number of shares of Common
Stock (or other capital stock, as the case may be) issuable upon
exercise of the Rights. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in 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) hereof.
(ii) In the event that any Person shall become an Acquiring
Person, other than pursuant to any transaction set forth in Section
13(a) hereof, then, promptly following the occurrence of such event (a
"Section 11(a)(ii) Event"), proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof)
shall thereafter have, and proper provision shall be made so that each
such holder shall have, the right to receive, upon exercise thereof at
a price equal to the then current Exercise Price in accordance with the
terms of this Agreement, such number of shares of Common Stock as shall
equal the result obtained by (x) multiplying the then current Exercise
Price by the number of tenths of one share of Common Stock for which a
Right was potentially exercisable immediately prior to the first
occurrence of a Section
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11(a)(ii) Event (such that if the Right was potentially exercisable for
one tenth of one share of Common Stock immediately prior to such
Section 11(a)(ii) Event, the Exercise Price would be multiplied by
one), and dividing that product by (y) 50% of the current market price
(as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the date of the first occurrence of a Section 11(a)(ii)
Event (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Certificate of Incorporation but
are not outstanding and are not reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, by a vote of the
majority of the Board of Directors, shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess
being the "Spread"); and
(B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon
payment of the applicable Exercise Price, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity securities
of the Company, (such other equity securities being referred
to as "capital stock equivalents"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, such substituted items having an aggregate value
equal to the Current Value, where such aggregate value has
been determined by a majority of the Board of Directors after
receiving advice from a nationally recognized investment
banking firm;
provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Exercise
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash shall have an aggregate value
equal to the Spread. To the extent that the Company determines that
some action need be taken pursuant to the first sentence of this
Section 11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per share of Common Stock on the Section
11(a)(ii) Trigger Date and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Stock on such
date.
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(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Common Stock (or shares having the same rights,
privileges and preferences as shares of Common Stock ("equivalent common
stock")) or securities convertible into Common Stock or equivalent common stock
at a price per share of Common Stock or per share of equivalent common stock (or
having a conversion price per share, if a security convertible into Common Stock
or equivalent common stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on such record date,
then the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the sum of the number
of shares of Common Stock outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock and/or equivalent common stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock and/or equivalent
common stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by a majority of the Board of 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. Shares of
Common Stock owned by or held for the account of the Company or any Subsidiary
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Common Stock (including any such distribution made in
connection with a share exchange or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock but
including any dividend payable in stock other than Common Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b) hereof), then
the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on such
record date less the fair market value (as determined in good faith by a
majority of the Board of 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) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or
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warrants applicable to a share of Common Stock and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Exercise Price shall be adjusted to be the Exercise Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current market
price" per share of Common Stock (or, after the occurrence of a Triggering
Event, any other securities) on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock or other securities for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that if, prior to the
expiration of such requisite thirty Trading Day period, the issuer announces
either (A) a dividend or distribution on such Common Stock (or other securities)
payable in such Common Stock (or other securities) or securities convertible
into such Common Stock (or other securities), other than the Rights, or (B) any
subdivision, combination or reclassification of such Common Stock (or other
securities), then, following the ex-dividend date for such dividend or the
record date for such subdivision, as the case may be, the "current market price"
shall be properly adjusted to take into account such event. The closing price
for each day shall be, if the shares of Common Stock (or other securities) are
listed and admitted to trading on a national securities exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
shares are listed or admitted to trading or, if such shares of Common Stock (or
other securities) are not listed or admitted to trading on any national
securities exchange, the last quoted sales price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported on The Nasdaq Stock Market's National Market (the "Nasdaq National
Market") or such other system then in use, or, if on any such date such shares
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
shares of Common Stock (or other securities) selected by a majority of the Board
of Directors. If on any such date no market maker is making a market in such
shares, the fair value of such shares on such date as determined in good faith
by a majority of the Board of Directors, shall be used. The term "Trading Day"
shall mean a Business Day or, if such shares are listed or admitted to trading
on any national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to trading is
open for the transaction of business.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Exercise Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
(or other securities). Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
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(f) If, as a result of an adjustment made pursuant to Sections
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Exercise Price thereof shall be subject to adjustment from time to
time in the manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of Common Stock
(or other securities or amount of cash or combination thereof) that may be
acquired from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock or other securities (calculated to the nearest one-millionth of a
share) obtained by
(i) multiplying (x) the number of shares of Common Stock or
other securities covered by a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price; and
(ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of shares of Common Stock (or other securities) that may be acquired upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of shares of Common
Stock (or other securities) for which a Right was exercisable 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
ten-thousandth) obtained by dividing the Exercise Price in effect immediately
prior to adjustment of the Exercise Price by the Exercise Price in effect
immediately after adjustment of the Exercise Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten days later than the date of such public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the
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Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Exercise
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Common Stock (or other securities) issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per share and the number of
shares of Common Stock (or other securities) which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below the then par value, if any, of the number of shares of
Common Stock (or other securities) issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such fully paid and nonassessable number of shares of Common Stock (or other
securities) at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of that number of shares of Common Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of shares of Common Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; 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
(fractional or otherwise) or securities 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 Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Stock, (ii) issuance wholly for cash of any shares of
Common Stock at less than the current market price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
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Section 11, hereafter made by the Company to holders of its Common Stock, shall
not be taxable to such holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the Exercisability Date:
(i) effect a share exchange with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof);
(ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof); or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of transactions, assets or
earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof); if
(x) at the time of or immediately after such share
exchange, merger or sale, there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights; or
(y) prior to, simultaneously with, or immediately
after such share exchange, merger or sale, the Person which
constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have distributed or otherwise transferred to
its stockholders (or other persons holding an equity interest in such
Person) Rights previously owned by such Person or any of its Affiliates
and Associates;
provided, however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to effect a share exchange with, merge with or into,
or sell or transfer assets or earning power to, any other Subsidiary of the
Company.
(o) After the Exercisability Date, the Company shall not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a
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brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Exercisability Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly:
(x) the Company shall effect a share exchange with, or merge
with and into, any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
share exchange or merger,
(y) any Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall effect a
share exchange with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such share
exchange or merger and, in connection with such share exchange or
merger, all or part of the outstanding shares of Common Stock shall be
converted into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) to any
Person or Persons (other than the Company or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)
hereof), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole),
(any such event described in clause x,y or z above being a "Section 13 Event");
then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Exercise Price (disregarding any adjustment
of the Exercise Price pursuant to Section 11(a)(ii) hereof), such
number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of common stock of the Principal Party (as such
term is hereinafter defined), which shares shall not be subject to any
liens, encumbrances, rights of first refusal, transfer restrictions or
other adverse claims, as shall be equal to the result obtained by:
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(A) multiplying the then current Exercise Price by
the number of tenths of a share of Common Stock for which a
Right is exercisable immediately prior to the first occurrence
of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of tenths of a share of such Common
Stock for which a Right was exercisable immediately prior to
the first occurrence of such Section 11(a)(ii) Event by the
Exercise Price in effect immediately prior to such first
occurrence), and
(B) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Exercise
Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)
hereof) per share of the common stock of such Principal Party
on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of
its common stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions of this
Agreement shall thereafter be applicable to its shares of common stock
thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of
no further effect following the first occurrence of any Section 13
Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof, (A) the Person
that is the issuer of any securities into which shares of Common Stock
are converted in such merger or share exchange, or, if there is more
than one such issuer, the issuer of common stock that has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof) and (B) if no securities are so issued, the Person that is the
other party to such merger or share exchange, or, if there is more than
one such Person, the Person the common stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof); and
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(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the
party receiving the largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the common stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof); provided,
however, that in any such case:
(A) if the common stock of such Person is not at such
time, and has not been continuously over the preceding
twelve-month period, registered under Section 12 of the
Exchange Act ("Registered Common Stock"), or such Person is
not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other
Person;
(B) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person;
(C) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Principal Party" shall
refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current
market price (determined pursuant to Section 11(d) hereof);
and
(D) if the common stock of such Person is not
Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have
Registered Common Stock outstanding, "Principal Party" shall
refer to whichever ultimate parent entity is the corporation
having the greatest stockholders equity or, if no such
ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the
greatest net assets.
(c) The Company shall not consummate any such share exchange, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its common stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
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providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the common stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying
with the requirement of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to ensure that any
acquisition of such common stock upon the exercise of the Rights
complies with any applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or Bylaws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of common stock of such
Principal Party at less than the then current market price per share
(determined pursuant to Section 11(d) hereof) or securities exercisable
for, or convertible into, common stock of such Principal Party at less
than such then current market price (other than to holders of Rights
pursuant to this Section 13); or
(ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the common stock of such
Principal Party pursuant to the provisions of Section 13;
then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or share exchanges or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a)
hereof.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the Persons to which such
fractional Rights would otherwise be issuable an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this Section
14(a), the market value of a whole Right shall be the closing price 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 of the
Rights for any day shall be:
(i) if the Rights are listed or admitted to trading on a
national securities exchange, 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
(ii) if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted sales price; or
(iii) if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported on the Nasdaq
National Market or such other system then in use; or
(iv) 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 a majority of the Board of Directors; or
(v) 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 a majority of the Board of Directors, which
determination shall be described in a statement filed with the Rights
Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Common Stock (or other securities) upon exercise of the Rights or to distribute
certificates which evidence such fractional shares of Common Stock (or other
securities). In lieu of such fractional shares of Common Stock (or other
securities), the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the then current market value of one share
of Common Stock (or other securities). For purposes of this Section 14(b), the
current market value of one share of Common Stock (or other securities) shall be
the closing price (as the term "closing price" is used in Section 11(d) hereof)
of one share of Common Stock (or other securities) for the Trading Day
immediately prior to the date of such exercise.
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(c) The holder of a Right, by the acceptance of the Right, expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Exercisability Date, the registered holders of certificates representing shares
of Common Stock); and any registered holder of a Rights Certificate (or, prior
to the Exercisability Date, of a certificate representing shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Exercisability Date, of a certificate
representing shares of Common Stock), may, in his own behalf and for his own
benefit, enforce (and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect
of) his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights 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 shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Exercisability Date, the Rights shall be
transferable only in connection with the transfer of Common Stock;
(b) after the Exercisability Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Exercisability Date, the
associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate or the
associated Common Stock Certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary;
and
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(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company
must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby; nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 25 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses, including reasonable
fees and disbursements of its counsel, incurred in connection with the execution
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company shall indemnify the Rights Agent, its officers,
employees, agents and directors for, and hold each of them harmless against, any
losses, expenses, claims, damages or liabilities incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent or such other indemnified party in
connection with the acceptance or administration of this Agreement and
performance hereunder, including without limitation, the costs and expenses of
defending against any claim of liability therefrom, directly or indirectly, and
will promptly reimburse the Rights Agent for legal and other expenses reasonably
incurred in defending any such loss, expense, claim, damage or liability.
(b) The Rights Agent shall be protected by the indemnity provided by
this Section 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 or the performance of its duties hereunder
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in reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to have been signed, executed and, where necessary, verified or acknowledged
by the proper Person or Persons.
Section 19. Merger or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may effect a share exchange, or any
corporation resulting from any merger or share exchange to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stockholder services businesses of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any document or
any further act on the part of any of the parties hereto; provided, however,
that such corporation would be eligible for appointment as a successor Rights
Agent under the 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 Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations shall be read
into this Agreement against the Rights Agent) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
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(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person, Affiliate
or Associate and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established by a certificate
signed by any person reasonably believed by the Rights Agent to be the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; provided, however, that such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) 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 Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(d) The Rights Agent is serving as an administrative agent and,
accordingly, shall not have any responsibility for the validity or legality of
any provision of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for the validity, legality or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or failure
by the Company to satisfy conditions contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt by the Rights
Agent of the certificate describing any such adjustment contemplated by 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 shares
of Common Stock or any other securities to be issued pursuant to this Agreement
or any Rights Certificate or as to whether any shares of Common Stock or any
other securities will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the performance by the Rights Agent of its duties under this
Agreement.
(f) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its
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duties; and it shall not be liable to the Company, the holder of any Rights
Certificate or any stockholder of the Company for any action taken or suffered
to be taken by it in good faith in accordance with instructions of any such
officer or for any delay in acting while awaiting 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 Business Days after the date any such officer of the Company actually
receives 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.
(g) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or offer
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(h) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct if reasonable care was exercised in the selection and
continued employment thereof.
(i) 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 or in the exercise of its rights hereunder if
the Rights Agent in its sole judgment shall have reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, either has not
been completed, has not been signed, or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company. If such certificate has been completed and signed, the Rights
Agent may assume without further inquiry that the Rights Certificate is not
owned by a person described in Section 4(b) or Section 7(e) hereof and shall not
be charged with any knowledge to the contrary.
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(k) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
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 Stock by
registered or certified mail, and to the holders of 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 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 organized and doing business
under the laws of the United States or any state of the United States, in good
standing, and may be the Company or a Subsidiary of the Company. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if 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, 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.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by a majority of the Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Agreement in the Exercise Price or the number or kind or
class of shares or other securities or property that may be acquired under the
Rights Certificates. In addition, in connection with the issuance or sale of
shares of Common Stock following the Exercisability Date and prior to the
Expiration Date, the Company:
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(i) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and
(ii) may, in any other case, if deemed necessary or
appropriate by the Board of Directors, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that no such Rights Certificate
shall be issued if, and to the extent that (x) the Company shall be
advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to
whom such Rights Certificate would be issued, or (y) appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors of the Company pursuant to paragraph (b) of this Section 23 and shall
not be redeemed in any other manner. Notwithstanding anything contained or
implied in this Agreement to the contrary, the Rights shall not be exercisable
after the occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder have expired.
(b) The Board of Directors of the Company may, at its option,
at any time prior to the Close of Business on the tenth Business Day after the
Stock Acquisition Date, redeem all, but not less than all, the then outstanding
Rights at a redemption price of $.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that with respect to any redemption of
Rights under either of the circumstances set forth in clauses (i) and (ii)
below, the Rights may be redeemed only if there are Continuing Directors then in
office and the Board of Directors of the Company, with the concurrence of a
majority of the Continuing Directors then in office, approves such redemption:
(i) such approval occurs at any time after any Person becomes an Acquiring
Person, or (ii) such approval occurs at any time after a change (resulting from
a proxy solicitation or from a vote of stockholders or in any other manner) in a
majority of the directors in office at the commencement of such solicitation, or
prior to such vote if any Person who is a participant in such solicitation or
vote has stated (or, if the majority of the directors in office at the
commencement of such solicitation or prior to such vote has determined in good
faith) that such Person (or any of its Affiliates or Associates) intends to take
or may consider taking, any action that would result in such Person becoming an
Acquiring Person or that would result in the occurrence of a Section 11(a)(ii)
Event. The Company may, at its option, pay the Redemption Price in cash, shares
of Common Stock (based on the current per share market price of shares of Common
Stock at the time of redemption determined pursuant to Section 11(d) hereof) or
any other form of consideration deemed appropriate by the Board of Directors of
the Company; provided that if the Company elects to pay the Redemption Price in
shares of Common Stock, the Company shall not be required to issue fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right
33
37
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount of cash equal to the same fraction of the
current per share market price of a whole share of Common Stock.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (b) 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 10 days after such action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (b), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Exercisability Date, on the registry books of the transfer agent for the
Common Stock of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof and other than in connection with the purchase of shares of
Common Stock prior to the Exercisability Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option.
at any time after any Person becomes an Acquiring Person, exchange all or any
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"); provided, however,
that with respect to any such action by the Board of Directors as to such an
exchange, the Rights may be so exchanged only if (i) there are Continuing
Directors then in office and (ii) the Board of Directors of the Company approves
such exchange with the concurrence of a majority of the Continuing Directors
then in office.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) 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 shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to
34
38
all of the holders of such Rights at their addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common 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 for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current per share
market price of a whole share of Common Stock. For the purposes of this
paragraph (d), the current market price of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to the
second and third sentences of Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Exercisability Date,
(i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the
holders of Common Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the company);
(ii) to offer to the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional shares of
Common Stock or shares of stock of any class or any other securities,
rights or options;
(iii) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Common Stock);
(iv) to effect any share exchange or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its
35
39
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o) hereof);
or
(v) to effect the liquidation, dissolution or winding up of
the Company;
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 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, share exchange, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock, if any such
date is to be fixed), and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Common Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Common Stock,
whichever shall be the earlier; provided, however, that no such notice shall be
required pursuant to this Section 25 if any Subsidiary of the Company effects a
share exchange or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including by telex, telegram or
cable) and be mailed or sent or delivered, if to the Company, at the following
address (until another address is filed in writing by the Company):
Xxxx Xxxx
Coventry Health Care, Inc.
00 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
with a copy to:
Xxx X. Xxxxxxxx, Esq.
36
40
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy Number: (000) 000-0000
and, if to the Rights Agent, at the following address (until another address is
filed in writing by the Rights Agent):
ChaseMellon Shareholder Services, L.L.C.
Four Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: _____________
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Exercisability Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
Prior to the Exercisability Date and subject to the penultimate
sentence of this Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing shares of Common Stock.
From and after the Exercisability Date and subject to the penultimate sentence
of this Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions
herein;
(iii) to shorten or lengthen any time period hereunder; or
(iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which
shall be consistent with, and for the purpose of fulfilling, the
objectives of the Board in adopting this Agreement, including any
change in the number or class of shares of capital stock of the Company
for which the Rights are potentially exercisable prior to a Triggering
Event;
provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests
37
41
of the holders of Rights; and provided, further, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence
(A) subject to Section 31 hereof, a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Agreement to change the
Exercise Price hereunder. Upon the delivery of a certificate from an appropriate
officer of the Company or, so long as any Person is an Acquiring Person
hereunder, from the majority of the Board of Directors, which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
which changes the rights and duties of the Rights Agent under this Agreement
shall be effective without the consent of the Rights Agent, and no supplement or
amendment shall be made which changes the Redemption Price, the Exercise Price,
the Expiration Date or the number of shares of Common Stock (or other
securities) for which a Right is exercisable without the approval of a majority
of the Board of Directors. Prior to the Exercisability Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of outstanding
shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d- 3(d)(1)(i) of the
Exchange Act Regulations as in effect on the date hereof. Except as otherwise
specifically provided herein, the Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board, or to the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (i) to interpret the
provisions of this Agreement, and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board or by a majority of the Board in good faith (x)
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) shall not subject the Board
or any member thereof to any liability to the holders of the Rights.
Section 29. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
38
42
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
Rights Certificates (and, prior to the Exercisability Date, registered holders
of shares of Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Exercisability Date, registered holders of
shares of Common Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if (i) any such
term, provision, covenant or restriction is held by such court or authority to
be invalid, void or unenforceable, and a majority of the Board determines in its
good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement; and (ii) at the time
of such holding by such court or authority, the Rights are not redeemable, then
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business on the tenth day following the date
of such determination by a majority of the Board as described above.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Delaware.
Section 33. Counterparts.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
39
43
Section 34. Descriptive Headings.
The headings contained in this Agreement are for descriptive purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
COVENTRY HEALTH CARE, INC.
By: /s/
---------------------------------
Name:
Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/
---------------------------------
Name:
Title:
40
44
EXHIBIT A
[Form of Rights Certificate]
Certificate No. ___________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS
AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.] *
Rights Certificate
COVENTRY HEALTH CARE, INC.
This certifies that [ ], or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated February __, 1996 (the "Rights Agreement") between
Coventry Health Care, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent",
which term shall include any successor Rights Agent under the Rights Agreement),
to
--------
The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
45
purchase from the Company at any time after the Exercisability Date (as such
term is defined in the Rights Agreement) and prior to the Expiration Date (as
such term is defined in the Rights Agreement) at the office of the Rights Agent
or its successor designated for such purpose, one-tenth of one fully paid
nonassessable share of Common Stock, $.01 par value, of the Company (the "Common
Stock") at the Exercise Price initially of $80 per one tenth of one share of
Common Stock, upon presentation and surrender of this Rights Certificate with
the Election to Purchase and related certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares of Common
Stock which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above shall be subject to adjustment in
certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement) or, under certain circumstances described in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase shares of
capital stock of an entity other than the Company or receive cash or other
assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of
46
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the Rights
Agent and are available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $.001 per Right, payable at the Company's
option in cash or in Common Stock, subject to adjustment in certain events as
provided in the Rights Agreement.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities which may 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
47
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company. Dated as
of __________________.
ATTEST: COVENTRY HEALTH CARE, INC.
By:
---------------------------- ---------------------------------
Title: Title:
---------------------- ------------------------------
Countersigned:
----------------------------
By
-------------------------
Authorized Signature
48
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED _____________________________________________ hereby sells,
assigns and transfers unto _________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated:__________________________, [____].
------------------------------------------
Signature
Signature Guaranteed:
49
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_______________, [____].
-----------------------------------
Signature
Signature Guaranteed:
------------------------------------------------------------------------------
NOTICE
This signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
50
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate)
To: COVENTRY HEALTH CARE, INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the shares of Common
Stock, issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Please insert social security
or other identifying number:
---------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Please insert social security or other identifying number:
Dated:_________________________, [____].
------------------------------------------
Signature
Signature Guaranteed:
------------------------------------------------------------------------------
51
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:_______________, [____].
------------------------------------------
Signature
Signature Guaranteed:
------------------------------------------------------------------------------
NOTICE
This signature to the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
52
EXHIBIT B
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of COVENTRY HEALTH CARE, INC. Common Stock as of
the Record Date will receive, a distribution of one Stock Purchase Right per
share of Coventry Health Care, Inc. Common Stock in accordance with and pursuant
to the Rights Agreement (a "Right"). A Right will also accompany each share of
Coventry Common Stock issued following the Record Date. Each Right, when it
first becomes exercisable, entitles the holder to purchase from Coventry Health
Care, Inc. one-tenth of one share of Common Stock at an initial exercise price
of $80 per tenth of one share (the "Exercise Price"), subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be exercisable
or transferable apart from the shares of Coventry Common Stock with respect to
which they were distributed, and will be evidenced only by the certificates
representing such shares. The Rights will become exercisable and transferable
apart from the Coventry Common Stock on a date (the "Exercisability Date") that
is the earlier of (a) the close of business on the tenth day after the Stock
Acquisition Date, defined as the first date of a public announcement that a
person or group of affiliated or associated persons has become an Acquiring
Person (as defined below), or (b) the close of business on such date as a
majority of the Coventry Board of Directors shall determine, which date shall
follow the commencement of a tender or exchange offer that, if consummated,
would result in a person or group becoming an Acquiring Person. The Rights will
be exercisable from the Exercisability Date until the Expiration Date (which is
the earlier of the close of business on February 7, 2006 (the "Final Expiration
Date") or the date the Rights are redeemed by Coventry Health Care, Inc. (the
"Redemption Date")), at which time they will expire.
With certain exceptions described in the Rights Agreement, a person or
group becomes an Acquiring Person when such person or group acquires or obtains
the rights to acquire beneficial ownership of 15% or more of the then
outstanding shares of Coventry Common Stock.
Transferability of Rights. Prior to the Exercisability Date, the Rights
will not be transferable apart from the shares of Coventry Common Stock to which
they are attached. Thus, the surrender or transfer of any Coventry Common Stock
certificate prior to that date will also constitute the transfer of the Rights
associated with the shares represented by such certificate. As soon as
practicable after the Exercisability Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to each record holder of shares of
Coventry Common Stock as of the close of business on the Exercisability Date
and, in certain circumstances, holders of certain shares issued after the
Exercisability Date.
Flip-In Rights. Upon the acquisition of 15% of Coventry Common Stock by
an Acquiring Person (a "Flip-In Event"), each holder of a Right will thereafter
have the right (the "Flip-In Right") to receive, upon exercise, the number of
shares of Coventry Common Stock having a market value immediately prior to the
Flip-In Event equal to two times the then current Exercise Price of the Right,
provided, however, that any Right that is (or, in certain
53
circumstances specified in the Rights Agreement, was) beneficially owned by an
Acquiring Person (or any of its affiliates or associates) will become null and
void upon the occurrence of the Flip-In Event. Cash will be paid in lieu of
issuing fractional shares.
Flip-Over Rights. If, at any time following an Exercisability Date,
either (i) Coventry is acquired in a merger or other business combination
transaction or (ii) Coventry sells or otherwise transfers more than 50% of its
aggregate assets or earning power, each holder of a Right (except Rights
previously voided as described above) will thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, shares of common stock of the
Acquiring Person having a value equal to two times the then current Exercise
Price of the Right. The Flip-Over Right shall be exercisable apart from, and
regardless of the exercise or surrender of, the Flip-In Right.
Redemption of the Rights. At any time prior to the earlier of (i) the
close of business on the tenth day following the Stock Acquisition Date, or (b)
the close of business on the Final Expiration Date, and in certain other
circumstances, the Coventry Board of Directors may redeem the Rights in whole
but not in part at a Redemption Price of $.001 per Right.
Exchange of the Rights. At any time after any person becomes an
Acquiring Person, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock per right.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after such Acquiring Person becomes the
beneficial owner of 50% or more of the shares of Common Stock then outstanding.
Amendment of the Rights Agreement. At any time prior to the
Exercisability Date, the Coventry Board of Directors may amend any provision of
the Rights Agreement in any manner. Thereafter, the Board may amend the
Agreement in certain respects, including generally (a) to shorten or lengthen
any time period under the Agreement or (b) in any manner that the Board deems
necessary or desirable, so long as such amendment is consistent with and for the
purpose of fulfilling the objectives of the Board in originally adopting the
Rights Plan. Certain amendments (including changes to the Redemption Price,
Exercise Price, Expiration Date, or number of shares for which a Right is
exercisable), whether prior to the Exercisability Date or thereafter, are
permitted only upon approval by a majority of the Coventry Board.
