EXHIBIT 4.1
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of October 1, 1996, to the Rights Agreement, dated as
of September 27, 1991 (the "Rights Agreement"), between Foundation Health
Corporation, a Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C. (as successor to Chemical Trust Company of California and
Manufacturers Hanover Trust Company of California), a New Jersey Limited
Liability Company, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may
from time to time prior to the Distribution Date (as defined therein) supplement
or amend the Rights Agreement in accordance with the provisions of Section 27
thereof; and
WHEREAS, it is proposed that the Company enter into an Agreement and Plan
of Merger (as it may be amended or supplemented from time to time, the "Merger
Agreement"), among the Company, Health Systems International, Inc., a Delaware
corporation and FH Acquisition Corp., a Delaware corporation; and
WHEREAS, the Board of Directors of the Company has determined that the
Merger and the other transactions contemplated by the Merger Agreement are fair
to and in the best interests of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its stockholders to amend the Rights Agreement to
exempt the Merger Agreement and the transactions contemplated thereby from the
application of the Rights Agreement.
NOW, THEREFORE, the Company and the Rights Agent hereby amend the Rights
Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by adding the
following sentence at the end thereof:
"Neither Health Systems International, Inc., a Delaware
corporation ("Parent"), FH Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), nor any of their respective Subsidiaries, shall be deemed
to be an Acquiring Person with respect to and to the extent that
shares of Common Stock are acquired by such entities or their
Affiliates or Subsidiaries in connection with the transactions
contemplated by the Agreement and Plan of Merger (as it may be
amended or supplemented from time to
time, the "Merger Agreement") entered into as of October 1, 1996,
among the Company, Parent and Merger Sub."
2. Section 30 of the Rights Agreement is hereby amended to add the
following sentence at the end thereof:
"Nothing in this Agreement shall be construed to create or
cause a Distribution Date or Stock Acquisition Date or give
any holder of Rights or any other Person any legal or
equitable rights, remedy or claim under this Agreement in
connection with the Merger Agreement or any transactions
contemplated by the Merger Agreement."
3. Section 24 is hereby amended by deleting the heading for such Section
and deleting Sections 24(a)(i), (a)(ii) and (b) in their entirety and
substituting therefor the following:
"24. TERMINATION AND EXCHANGE.
(a)(i) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (x) the Stock Acquisition Date or
(y) 5 p.m., San Francisco time, on the Final Expiration Date,
terminate the Rights without any payment to any holder thereof.
(ii) In addition, and notwithstanding the provisions of Section
24(a)(i), the Board of Directors of the Company may terminate the
Rights without any payment to any holder thereof following the Stock
Acquisition Date but prior to any event described in Section 13(a)
either (x) in connection with any event specified in Section 13(a) in
which all holders of Common Stock are treated alike and not involving
(other than as a holder of Common Stock being treated like all other
such holders) an Acquiring Person or an Affiliate of Associate thereof
or any other Person in which such Acquiring Person or Affiliate or
Associate thereof has any interest, or any other Person acting
directly or indirectly on behalf of or in association with any such
Acquiring Person or Affiliate or Associate thereof, or (y) following
the occurrence of an event set forth in, and the expiration of any
periods during which the holder of Rights may exercise the rights
under Section 11(a)(ii) if and for as long as any Acquiring Person
having triggered such event is not thereafter the Beneficial Owner of
securities representing 15% or more of the outstanding shares of the
Voting Power, and at the time of termination there are no other
Persons who are Acquiring Persons.
(b) In the case of a termination permitted under Section
24(a)(i), immediately upon the action of the Board of Directors of the
Company ordering the termination of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further
action and without any
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notice, the right to exercise the Rights will terminate and each
right will thereafter be null and void. In the case of a
termination permitted only under Section 24(a)(ii), evidence of
which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and each right will thereafter be
null and void only after ten Business Days following the giving of
notice of such termination to the holders of such Rights if no event
set forth in Section 11(a)(ii) shall have occurred, and, if such event
shall have occurred, upon the later of ten Business Days following the
giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. Within ten days
after the action of the Board of Directors ordering any termination of
the Rights, the Company shall give notice of such termination to the
Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the
holder receives the notice."
4. Section 24 of the Rights Agreement is hereby amended by adding a new
subsection (d) thereto:
"(d) Notwithstanding anything in this Agreement, the Rights
shall terminate without any payment or notice to any holder thereof
immediately prior to the Effective Time as defined in the Merger
Agreement."
5. The second paragraph of Section 3(a) of the Rights Agreement is hereby
amended by deleting the word "redemption" and the immediately following comma in
the parentheticals following the phrase "Distribution Date" in each of the ninth
and fifteenth lines of such second paragraph.
6. Section 3(b) of the Rights Agreement is hereby amended as follows:
(a) the legend forming a part of Section 3(b) to the Rights Agreement is hereby
amended by deleting the word "redeemed" in the eleventh line of such legend
immediately following the phrase "such Rights may be" and substituting therefor
the word "terminated," and (b) in the parenthetical in the last paragraph of
Section 3(b), the word "redemption" and the immediately following comma shall be
deleted.
7. Clause (ii) of Section 7(a) of the Rights Agreement is hereby amended
by deleting in its entirety Clause (ii) and substituting in its place the
following:
"(ii) the time at which the Rights are terminated as provided in
Section 24 hereof,"
8. Section 23 of the Rights Agreement is hereby amended to delete the
word "redemption" in line twelve and substitute the word "termination" therefor.
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9. Section 28 of the Rights Agreement is hereby amended by deleting the
word "redeem" in each place in the parenthetical in clause (ii) and substituting
the word "terminate" therefor.
10. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state.
11. This Amendment may be executed in any number of counterparts, each of
which shall for all purposes be deemed an original, and all of which together
shall constitute but one and the same instrument.
Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and the respective corporate seals to be affixed and attested, all
as of the day and year first above written.
Attest: FOUNDATION HEALTH CORPORATION
[SEAL]
By: /S/ XXXXX XXXXXXX By: /S/ XXXX X. XXXXXX
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Name: Xxxxx Xxxxxxx Name: Xxxx X. Xxxxxx
Title: Title:
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
[SEAL]
By: /S/ XXX XXXX By: /S/ XXXXXX XXXXXXX
--------------------------- --------------------------
Name: Xxx Xxxx Name: Xxxxxx Xxxxxxx
Title: Assistant Vice President Title: Trust Officer
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