EXHIBIT 1
RIGHTS AGREEMENT
dated as of
December 13, 2001
between
LABORATORY CORPORATION OF AMERICA HOLDINGS
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
TABLE OF CONTENTS
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PAGE
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SECTION 1. Definitions......................................................1
SECTION 2. Issuance of Rights and Right Certificates........................6
SECTION 3. Form of Right Certificates.......................................7
SECTION 4. Registration; Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates........8
SECTION 5. Exercise of Rights...............................................9
SECTION 6. Cancellation and Destruction of Right Certificates..............11
SECTION 7. Reservation and Availability of Capital Stock...................11
SECTION 8. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights..............................................12
SECTION 9. Certificate of Adjusted Purchase Price or Number of Shares......21
SECTION 10. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................21
SECTION 11. Fractional Rights and Fractional Shares.........................23
SECTION 12. Rights of Action................................................24
SECTION 13. Agreement of Right Holders......................................25
SECTION 14. Right Certificate Holder Not Deemed a Stockholder...............26
SECTION 15. Appointment of Rights Agent.....................................26
SECTION 16. Merger or Consolidation or Change of Name of Rights
Agent.........................................................26
SECTION 17. Duties of Rights Agent..........................................27
SECTION 18. Change of Rights Agent..........................................30
SECTION 19 Redemption......................................................30
SECTION 20. Exchange........................................................31
SECTION 21. Notice of Proposed Actions......................................32
SECTION 22. Notices.........................................................33
SECTION 23. Supplements and Amendments......................................33
SECTION 24. Successors......................................................34
SECTION 25. Determinations and Actions by the Board of Directors............34
SECTION 26. Benefits of this Agreement......................................34
SECTION 27. Severability....................................................34
SECTION 28. Governing Law...................................................35
SECTION 29. Counterparts....................................................35
SECTION 30. Descriptive Headings............................................35
Exhibit A - Form of Certificate of Designation of Preferred Stock
Exhibit B - Summary Description of the Stockholder Rights Plan
Exhibit C - Form of Right Certificate
RIGHTS AGREEMENT
AGREEMENT dated as of December 13, 2001, between LABORATORY CORPORATION OF
AMERICA HOLDINGS, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company., a trust company chartered by the State of New York,
as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on December 12, 2001, the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) outstanding at
the close of business (as hereinafter defined) on December 21, 2001 (the
"Record Date") and has authorized the issuance, upon the terms and subject to
the conditions herein, of one Right (subject to adjustment) in respect of each
share of Common Stock issued after the Record Date, each Right representing the
right to purchase, upon the terms and subject to the conditions herein, one
one-hundredth (subject to adjustment) of a share of Preferred Stock (as
hereinafter defined);
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"Acquiring Person" means any Person who, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of the Specified
Percentage of the shares of Common Stock then outstanding. Notwithstanding
anything else contained herein, an Acquiring Person shall not include (i) an
Exempt Person; (ii) any Person that the Board of Directors of the Company
determines in good faith became the Beneficial Owner of the Specified
Percentage of shares of Common Stock inadvertently (including, without
limitation, because (A) such Person was unaware that it Beneficially Owned the
Specified Percentage of shares of Common Stock or (B) such Person was aware of
the extent of its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, unless and until such Person shall have failed to divest itself, as
soon as practicable (as determined, in good faith, by the Board), of Beneficial
Ownership of a sufficient number of shares of Common Stock so that such Person
would own less than the Specified Percentage of shares of Common Stock
outstanding; (iii) Roche Holdings Inc.("Roche") and its Affiliates and
Associates, so long as Roche and its Affiliates and Associates do not
Beneficially Own or become the Beneficial
Owner of shares of Common Stock in addition to shares of Common Stock reported
as Beneficially Owned by Roche in its Schedule 13D filed with the Securities
and Exchange Commission dated June 13, 2001 (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), unless at
the time, Roche, together with its Affiliates and Associates, is not the
Beneficial Owner of the Specified Percentage of the shares of Common Stock then
outstanding; and (iv) any Person that, as the result of an acquisition of
shares of Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares of Common Stock
Beneficially Owned by such Person to the Specified Percentage of the shares of
Common Stock then outstanding, provided, however, that if a Person shall become
the Beneficial Owner of the Specified Percentage of the shares of Common Stock
then outstanding by reason of such share acquisition by the Company and shall
thereafter become the Beneficial Owner of any additional shares of Common Stock
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock), then such Person shall be deemed to be an "Acquiring
Person" unless upon becoming the Beneficial Owner of such additional shares of
Common Stock such Person does not Beneficially Own the Specified Percentage of
the shares of Common Stock then outstanding.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2 under the
Exchange Act as in effect on the date hereof.
"Associate" has the meaning ascribed to such term in Rule 12b-2 of the
Exchange Act as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
have "Beneficial Ownership" of and to "Beneficially Own", any securities:
(i) which such Person or any of its Affiliates or Associates,
directly or indirectly, beneficially owns (as determined pursuant to Rule
13d-3 under the Exchange Act as in effect on the date hereof);
(ii) which such Person or any of its Affiliates or Associates,
directly or indirectly, has
(A) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of such securities); provided, however, that a
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Person shall not be deemed the "Beneficial Owner" or to "Beneficially
Own", (1) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, (2) securities which such Person has a
right to acquire upon the exercise of Rights at any time prior to the
time that any Person becomes an Acquiring Person or (3) securities
issuable upon the exercise of Rights from and after the time that any
Person becomes an Acquiring Person if such Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 2(b) or Section 3(b)
hereof ("Original Rights") or pursuant to Section 8(i) or Section
8(p) with respect to an adjustment to Original Rights; or
(B) the right to vote (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement or
understanding or otherwise; provided that a Person shall not be
deemed the "Beneficial Owner" of or to "Beneficially Own" any
security under this clause (B) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding (1) arises solely from a revocable proxy
or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Exchange Act and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) and with respect to
which the Person or any of its Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of such securities) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in
subparagraph (ii)(B) immediately above) or disposing of any such
securities;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such position, to be the
"Beneficial Owner" of, to have "Beneficial Ownership" of or to "Beneficially
Own" any securities that are "Beneficially Owned", including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other such
officer, director or employee of an Exempt Person.
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"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
The "close of business" on any given date means 5:00 p.m., New York City
time, on such date; provided that if such date is not a Business Day "close of
business" means 5:00 p.m., New York City time, on the next succeeding Business
Day.
"Common Stock" means the Common Stock, par value $0.10 per share, of the
Company, except that, when used with reference to any Person other than the
Company, "Common Stock" means the capital stock of such Person with the
greatest voting power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
"Distribution Date" means the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date and (ii) the close of business on
the tenth Business Day (or such later day as may be designated prior to the
occurrence of a Section 8(a)(ii) Event by action of the Board) after the date
of the commencement of a tender or exchange offer by any Person if, upon
consummation thereof, such Person would be an Acquiring Person; provided,
however, that if either of such dates occurs after the date of this Agreement
and on or prior to the Record Date, then the Distribution Date shall be the
Record Date.
"Exempt Person" means the Company or any Subsidiary of the Company
(including, without limitation, in any fiduciary capacity), or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Stock for or pursuant to the terms of any such plan
or for the purpose of funding any such plan or other benefits for employees of
the Company or any Subsidiary of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the earlier of (i) the Final Expiration Date and
(ii) the time at which all Rights are redeemed as provided in Section 19 or
exchanged as provided in Section 20.
"Final Expiration Date" means the close of business on December 13, 2011.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization.
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"Preferred Stock" means the Series A Participating Cumulative Preferred
Stock, par value $0.001 per share, of the Company, having the terms set forth
in the form of certificate of designation attached hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as provided
herein) at which a holder of a Right may purchase one one-hundredth of a share
of Preferred Stock (subject to adjustment as provided herein) upon exercise of
a Right, which price shall initially be $400.
"Securities Act" means the Securities Act of 1933, as amended.
"Specified Percentage" means 15% or more.
"Stock Acquisition Date" means the date of the first public announcement
(including the filing of a report on Schedule 13D under the Exchange Act (or
any comparable or successor report)) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities or
other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such first Person.
"Trading Day" means a day on which the principal national securities
exchange or over-the-counter market on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to trading on any
national securities exchange or over-the-counter market, a Business Day.
"Triggering Event" means any Section 8(a)(ii) Event or any Section 10
Event.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Adjustment Shares 8
Company Preamble
Exchange Ratio 20
Principal Party 10
Record Date Recitals
Redemption Price 19
Right Recitals
Rights Agent Preamble
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Term Section
---- -------
Right Certificate 3
Section 8(a)(ii) Event 8
Section 10 Event 10
Substitution Period 8
SECTION 2. Issuance of Rights and Right Certificates.
(a) As soon as practicable after the Record Date, the Company will send a
summary of the Rights substantially in the form of Exhibit B hereto, by
first-class mail, postage prepaid, to each record holder of the Common Stock as
of the close of business on the Record Date at the address of such holder shown
on the registry books of the Company. Certificates for the Common Stock issued
after the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date shall have printed or written on or otherwise affixed to them
the following legend:
This certificate also evidences certain Rights as set forth in a Rights
Agreement between LABORATORY CORPORATION OF AMERICA HOLDINGS (the
"Company") and American Stock Transfer & Trust Company dated as of
December 13, 2001 and as amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly after
receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate, may be
redeemed or exchanged or may expire. As set forth in the Rights Agreement,
Rights issued or transferred to, or held by, any Person who is, was or
becomes an Acquiring Person or an 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 be null and
void.
(b) Prior to the Distribution Date, (i) the Rights will be evidenced
by the certificates for the Common Stock and not by separate Right Certificates
(as hereinafter defined) and the registered holders of the Common Stock shall
be deemed to be the registered holders of the associated Rights, and (ii) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock.
(c) From and after the Distribution Date, the Rights will be evidenced
solely by separate Right Certificates and will be transferable only in
connection with the transfer of the Right Certificates pursuant to Section 4.
As soon as
6
practicable after the Company has notified the Rights Agent of the occurrence
of the Distribution Date, the Rights Agent will send, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Distribution Date (other than any Acquiring Person or any
Affiliate or Associate thereof), at the address of such holder shown on the
records of the Company, one or more Right Certificates evidencing one Right
(subject to adjustment as provided herein) for each share of Common Stock so
held. If an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 8, the Company shall, at the time of distribution
of the Right Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 11(a)) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights.
(d) Rights shall be issued in respect of all shares of Common Stock
outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of Common Stock
so issued or sold (A) pursuant to the exercise of stock options or under any
employee plan or arrangement or (B) upon the exercise, conversion or exchange
of other securities issued by the Company prior to the Distribution Date, and
(ii) may, in any other case, if deemed appropriate by the Board, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided that no such Right Certificate shall be issued
if, and to the extent that, (i) 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 Right Certificate would
be issued or (ii) appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
SECTION 3. Form of Right Certificates. (a) The certificates evidencing the
Rights (and the forms of assignment, election to purchase and certificates to
be printed on the reverse thereof) (the "Right Certificates") shall be
substantially in the form of Exhibit C 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, rule or regulation 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. The Right Certificates, whenever distributed, shall be dated as of the
Record Date.
(b) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either manually
or by facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary
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of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may, nevertheless, be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person
who signed such Right Certificates had not ceased to be such officer of the
Company. Any Right Certificate may be signed on behalf of the Company by any
Person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such Person
was not such an officer.
(c) Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of stock issuable upon exercise of the Rights
made in accordance with the provisions of this Agreement.
SECTION 4. Registration; Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Following the
Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the place for surrender of Right
Certificates upon exercise, transfer or exchange, books for registration and
transfer of the Right Certificates. Such books shall show with respect to each
Right Certificate the name and address of the registered holder thereof, the
number of Rights indicated on the certificate and the certificate number.
(b) At any time after the Distribution Date and prior to the Expiration
Date, any Right Certificate or Certificates may, upon the terms and subject to
the conditions set forth in this Agreement, be transferred or exchanged for
another Right Certificate or Certificates evidencing a like number of Rights as
the Right Certificate or Certificates surrendered. Any registered holder
desiring to transfer or exchange any Right Certificate or Certificates shall
surrender such Right Certificate or Certificates (with, in the case of a
transfer, the form of assignment and certificate on the reverse side thereof
duly executed) to the Rights Agent at the principal office or offices 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 Right Certificate or Certificates until the
registered holder of the Rights has complied with the requirements of Section
5(f). Upon satisfaction of the foregoing requirements, the Rights Agent shall,
subject to Sections 7(e), 11 and 20, countersign and deliver to the Person
entitled thereto a Right Certificate or Certificates as so requested. The
8
Company may require payment of a sum sufficient to cover any transfer tax or
other governmental charge that may be imposed in connection with any transfer
or exchange of any Right Certificate or Certificates.
(c) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will issue and
deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 5. Exercise of Rights. (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including Sections 5(e) and 5(f), 7(c), and 8(a)) in whole or
in part at any time after the Distribution Date and prior to the Expiration
Date upon surrender of the Right Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment (in lawful money of the United States
of America by certified check or bank draft payable in immediately available or
next day funds to the order of the Company) of the aggregate Purchase Price
with respect to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 5(a) and subject to
Section 17(k), the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock (or make available, if the
Rights Agent is the transfer agent therefor) certificates for the total number
of one one-hundredths of a share of Preferred Stock to be purchased (and the
Company hereby irrevocably authorizes its transfer agent to comply with all
such requests) or (B) if the Company shall have elected to deposit the shares
of Preferred Stock issuable upon exercise of the Rights with a depositary
agent, requisition from the depositary agent depositary receipts representing
interests in such number of one one-hundredths of a share of Preferred Stock to
be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent and the Company will direct the depositary agent to comply
with such request), (ii) requisition from the Company the amount of cash, if
any, to be paid in lieu of issuance of fractional shares in accordance with
Section 11 and (iii) after receipt of such certificates or depositary receipts
and cash, if any, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate (with such certificates or receipts
registered in such name or names as may be designated by such holder).
9
If the Company is obligated to deliver Common Stock, other securities or assets
pursuant to this Agreement, the Company will make all arrangements necessary so
that such securities and assets are available for delivery by the Rights Agent,
if and when appropriate.
(c) Each Person (other than the Company) in whose name any certificate for
Preferred Stock is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such Preferred Stock represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any transfer taxes or other governmental charges) was made;
provided that if the date of such surrender and payment is a date upon which
the transfer books of the Company relating to the Preferred Stock are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the applicable transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company except as provided herein.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
the number of Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 11.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 8(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
(or in any such Associate or Affiliate) or to any Person with whom the
Acquiring Person (or any such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 5(e) shall become null
and void without any further action, and no holder of such Rights shall have
any rights whatsoever with respect
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to such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that the provisions of this
Section 5(e) are complied with, but shall have no liability to any holder of
Right Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates and
Associates or any transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to any purported transfer pursuant to Section 4 or exercise
pursuant to this Section 5 unless the registered holder of the applicable
Rights (i) shall have completed and signed the certificate contained in the
form of assignment or election to purchase, as the case may be, set forth on
the reverse side of the Right Certificate surrendered for such transfer or
exercise, as the case may be, (ii) shall not have indicated an affirmative
response to clause 1 or 2 thereof and (iii) shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 6. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent in canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Right 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 the Rights Agent shall cancel, any other
Right Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 7. Reservation and Availability of Capital Stock. (a) The Company
covenants and agrees that it will cause to be reserved and kept available a
number of authorized but not outstanding shares of Preferred Stock sufficient
to permit the exercise in full of all outstanding Rights as provided in this
Agreement.
(b) So long as the Preferred Stock issuable upon the exercise of 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 securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Section
8(a)(ii) Event and determination of the consideration to be delivered by the
Company
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upon exercise of the Rights in accordance with Section 8(a)(iii), or as soon as
is required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act with respect to the securities
issuable upon exercise of the Rights, (ii) to cause such registration statement
to become effective as soon as practicable after such filing and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or blue sky
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause 7(c)(i), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect. Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable for securities in any
jurisdiction if the requisite qualification in such jurisdiction has not been
obtained, such exercise is not permitted under applicable law or a registration
statement in respect of such securities has not been declared effective.
(d) The Company shall take all such action as may be necessary to insure
that all one one-hundredths of a share of Preferred Stock issuable upon
exercise of Rights shall, at the time of delivery of the certificates for such
securities (subject to payment of the Purchase Price), be duly authorized,
validly issued, fully paid and nonassessable.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and other governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates and of any
certificates for Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax or other governmental charge
which may be payable in respect of any transfer involved in the issuance or
delivery of any Right Certificates or any certificates for Preferred Stock to a
Person other than the registered holder of the applicable Right Certificate.
Prior to any such issuance or delivery of any Right Certificates or any
certificates for Preferred Stock, any such transfer tax or other governmental
charge shall have been paid by the holder of such Right Certificate or it shall
have been established to the Company's satisfaction that no such tax or other
governmental charge is due.
SECTION 8. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.
12
(a) (i) If the Company shall at any time after the date of this
Agreement (A) pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock into a
greater number of shares, (C) combine the outstanding Preferred Stock into
a smaller number of shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger involving
the Company), the Purchase Price in effect immediately prior to the record
date for such dividend or the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred Stock or other capital stock issuable on such date, shall be
proportionately adjusted so that each holder of a Right shall (except as
otherwise provided herein, including Section 5(e)) thereafter be entitled
to receive, upon exercise of such Right at the Purchase Price in effect
immediately prior to such date, the aggregate number and kind of shares of
Preferred Stock or other capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when
the applicable transfer books of the Company were open, such holder would
have been entitled to receive upon such exercise and by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
which requires an adjustment under both this Section 8(a)(i) and Section
8(a)(ii), the adjustment provided for in this Section 8(a)(i) shall be
made prior to and in addition to any adjustment required pursuant to
Section 8(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become an
Acquiring Person (a "Section 8(a)(ii) Event"), then each holder of a Right
shall (except as otherwise provided herein, including Section 5(e))
thereafter be entitled to receive, upon exercise thereof at the Purchase
Price in effect immediately prior to the first occurrence of a Section
8(a)(ii) Event, in lieu of Preferred Stock, such number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock of the Company (such shares being referred to herein as the
"Adjustment Shares") equal to the result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of a Section
8(a)(ii) Event by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior
to such first occurrence (such product being thereafter referred to
as the "Purchase Price" for each Right) by
13
(y) 50% of the current market price per share of Common Stock
(determined pursuant to Section 8(d)(i)) on the date of such first
occurrence;
provided, however, that the Purchase Price (as so adjusted pursuant to the
foregoing clause (ii)(x)) and the number of Adjustment Shares so
receivable upon exercise of a Right shall be subject to further adjustment
as appropriate in accordance with Section 8(f). From and after the
occurrence of a Section 10 Event, any Rights that have not been exercised
pursuant to this Section 8(a)(ii) shall thereafter be exercisable only in
accordance with Section 10 and not pursuant to this Section 8(a)(ii).
(iii) If the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation but not outstanding or reserved
for issuance other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with Section
8(a)(ii), the Company shall, with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
Purchase Price then in effect, (A) (to the extent available) Common Stock
and then, (B) (to the extent available) such number of one one-hundredths
of a share of Preferred Stock as are then equivalent in value to the value
of the Adjustment Shares, and then, if necessary, (C) other equity or debt
securities of the Company, cash or other assets, a reduction in the
Purchase Price or any combination of the foregoing, having an aggregate
value (based upon the advice of a nationally recognized investment banking
firm) equal to the value of the Adjustment Shares; provided that (x) the
Company may, and (y) if the Company shall not have made adequate provision
as required above to deliver value within 30 days following the first
occurrence of a Section 8(a)(ii) Event (the "Substitution Period"), then
the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, (1) (to
the extent available) Common Stock and then (2) (to the extent available)
one-hundredths of a share of Preferred Stock and then, if necessary, (3)
other equity or debt securities of the Company, cash or other assets or
any combination of the foregoing, having an aggregate value (based upon
the advice of a nationally recognized investment banking firm) equal to
the excess of the value of the Adjustment Shares over the Purchase Price.
To the extent that the Company determines that some action is to be taken
pursuant to the preceding sentence, the Company (X) shall provide, subject
to Section 5(e), that such action shall apply uniformly to all outstanding
Rights and (Y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to decide the appropriate
form and value of any consideration to be delivered as referred to in such
sentence. If any such suspension occurs, the Company shall issue a public
announcement
14
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension
is no longer in effect. For purposes of this Section 8(a)(iii), the value
of the Common Stock shall be the current market price per share of Common
Stock (as determined pursuant to Section 8(d)(i)) on the date of the first
occurrence of a Section 8(a)(ii) Event; any common stock equivalent shall
be deemed to have the same value as the Common Stock on such date; and the
value of other securities or assets shall be determined pursuant to
Section 8(d)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into or exercisable for Preferred
Stock (or equivalent preferred stock) at a price per share of Preferred Stock
(or equivalent preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price per share of Preferred
Stock (as determined pursuant to Section 8(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate price (taking account of any conversion or exercise
price) of the total number of shares of Preferred Stock (and/or equivalent
preferred stock) so to be offered would purchase at such current market price
and the denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock (and/or equivalent preferred stock) so to be offered. In case
such subscription price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and if such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company) of
evidences of indebtedness, equity securities other than Preferred Stock, assets
(other than a regular periodic cash dividend out of the earnings or retained
15
earnings of the Company) or rights, options or warrants (excluding those
referred to in Section 8(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price per share of Preferred Stock (as determined
pursuant to Section 8(d)(iii)) on such record date, less the value (as
determined pursuant to Section 8(d)(iii)) of such evidences of indebtedness,
equity securities, assets, rights, options or warrants so to be distributed
with respect to one share of Preferred Stock and the denominator of which shall
be such current market price per share of Preferred Stock. Such adjustment
shall be made successively whenever such a record date is fixed, and if such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder other than
computations made pursuant to Section 8(a)(iii) or 11, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock at the close of the
regular session of trading for the 30 consecutive Trading Days immediately
prior to such date; for purposes of computations made pursuant to Section
8(a)(iii), the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
Common Stock at the close of the regular session of trading for the 10
consecutive Trading Days immediately following such date; and for purposes of
computations made pursuant to Section 11, the "current market price" per share
of Common Stock for any Trading Day shall be deemed to be the closing price per
share of Common Stock at the close of the regular session of trading for such
Trading Day; provided that if the current market price per share of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities exercisable for or
convertible into shares of such Common Stock (other than the Rights), or (B)
any subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, at the close of
the regular session of trading or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system at
the close of the regular session of trading with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the shares of
Common Stock are
16
listed or admitted to trading or, if the shares of Common Stock are not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use or, if on any such date the shares of Common Stock 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
Common Stock selected by the Board. If on any such date, no market maker is
making a market in the Common Stock, the "current market value" of such shares
on such date shall be as determined in good faith by the Board (or, if at the
time of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm) which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in Section 8(d)(i) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in such manner, the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied
by the current market price per share of Common Stock (as determined
pursuant to Section 8(d)(i)). For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 100.
(iii) For the purpose of any computation hereunder, the value of any
securities or assets other than Common Stock or Preferred Stock shall be
the fair value as determined in good faith by the Board or, if at the time
of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm, which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided that any
adjustments which by reason of this Section 8(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the nearest cent or to
the nearest
17
ten-thousandth of a share of Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made pursuant to Section
8(a)(ii) or Section 10(a), the holder of any Right shall be entitled to receive
upon exercise of such Right any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in Section 8, and
the provisions of Sections 5, 7, 10 and 11 with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock issuable 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 8(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 8(b) and 8(c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of
a share of Preferred Stock (calculated to the nearest one-millionth) obtained
by (i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such 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 Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted
18
or any day thereafter, but, if the Right Certificates have been issued, shall
be at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 8(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 11, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the par value, if any, of the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable such number of one one-hundredths of a share of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 8 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock or other capital stock, if
any, issuable upon such exercise over and above the number of one
one-hundredths of a share of Preferred Stock or other capital stock, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
19
(m) Anything in this Section 8 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 8, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the current market price,
issuance wholly for cash of any securities which by their terms are convertible
into or exercisable for Preferred Stock, stock dividends or issuance of rights,
options or warrants referred to in this Section 8 hereafter made by the Company
to the holders of its Preferred Stock, shall not be taxable to such
stockholders.
(n) The Company will not at any time after the Distribution Date (i)
consolidate, merge or otherwise combine with, or (ii) sell or otherwise
transfer (and/or permit any of its Subsidiaries to sell or otherwise transfer),
in one transaction or a series of related 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 if (x) at the
time of or immediately after such consolidation, merger, combination or sale
there are any rights, warrants or other instruments or securities outstanding
or any agreements or arrangements 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 consolidation,
merger, combination or sale, the stockholders of a Person who constitutes, or
would constitute, the "Principal Party" for the purposes of Section 10 shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company agrees that after the Distribution Date, it will not,
except as permitted by Sections 19, 20 and 23, 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 substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if at any
time after the date hereof and prior to the Distribution Date the Company shall
(i) pay a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock into a larger
number of shares or (iii) combine the outstanding Common Stock into a smaller
number of shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter as contemplated by
Section 2, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock 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
20
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
SECTION 9. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 8 and 10, 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 Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
the manner set forth in Section 22. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained.
SECTION 10. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) If, following the occurrence of a Section 8(a)(ii) Event, directly
or indirectly,
(x) the Company shall consolidate with, merge into or otherwise
combine with, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or
combination,
(y) any Person shall merge into, or otherwise combine with, the
Company, and the Company shall be the continuing or surviving corporation
of such merger or combination and, in connection with such merger or
combination, all or part of the outstanding shares of Common Stock shall
be changed into or exchanged for other stock or securities of the Company
or any other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries shall sell or
otherwise transfer, in one transaction or a series of related
transactions, to any other Person or Persons, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries, taken as a whole,
(each of the above, a "Section 10 Event") then, and in each such case, proper
provision shall promptly be made so that
(i) each holder of a Right shall thereafter be entitled to receive,
upon exercise thereof at the Purchase Price in effect immediately prior to
the first occurrence of a Section 8(a)(ii) Event, such number of duly
authorized, validly issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined),
21
not subject to any rights of call or first refusal, liens, encumbrances or
other claims, as shall be equal to the result obtained by dividing
(A) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of a Section
8(a)(ii) Event by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior
to such first occurrence (such product being thereafter referred to
as the "Purchase Price" for each Right and for all purposes of this
Agreement) by
(B) 50% of the current market price (determined pursuant to
Section 8(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such consolidation, merger,
combination, sale or transfer;
provided, however, that the Purchase Price (as so adjusted pursuant to the
foregoing clause (i)(A)) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 8(f) to
reflect any events occurring in respect of the Common Stock of such
Principal Party after the occurrence of such consolidation, merger, sale
or transfer;
(ii) the Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, combination, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 8 shall apply only to such Principal Party following the first
occurrence of a Section 10 Event; and
(iv) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its
Common Stock to permit exercise of all outstanding Rights in accordance
with this Section 10(a)) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" means
22
(i) in the case of any transaction described in Section 10(a)(x) or
10(a)(y), the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger,
consolidation or combination, and if no securities are so issued, the
Person that survives or results from such merger, consolidation or
combination; or
(ii) in the case of any transaction described in Section 10(a)(z),
the Person that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or transactions;
provided that in any such case, (A) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which are not
outstanding or otherwise reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 10 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Section 10(a) and 10(b) and providing that, as soon as practicable after the
date of any consolidation, merger, combination, sale or transfer mentioned in
Section 10(a), the Principal Party will
(i) prepare and file a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the Rights,
and will use its best efforts to cause such registration statement (A) to
become effective as soon as practicable after such filing and (B) to
remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the Expiration Date, and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
SECTION 11. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights, except prior to the Distribution
23
Date as provided in Section 8(p), or to distribute Right Certificates which
evidence fractional Rights. In lieu of any such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable an amount in cash
equal to the same fraction of the current market price of a whole Right. For
purposes of this Section 11(a), the current market price of a whole Right shall
be the closing price of a Right at the close of the regular session of trading
for the Trading Day immediately prior to the date on which such fractional
Rights would otherwise have been issuable. The closing price of a Right for any
day shall be determined in the same manner as set forth for the Common Stock in
Section 8(d)(i).
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 11(b), the current market price
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth
of the closing price of a share of Preferred Stock (as determined pursuant to
Section 8(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or upon any exchange
pursuant to Section 20, the Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised or
exchanged as herein provided an amount in cash equal to the same fraction of
the current market price of a share of Common Stock. For purposes of this
Section 11(c), the current market price of a share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to Section
8(d)) for the Trading Day immediately prior to the date of such exercise or
exchange.
(d) Each holder of a Right, by his acceptance of the Right, expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 11.
SECTION 12. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing Common Stock); and any such holder, without the
consent of any
24
other such holder or the Rights Agent, may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of, any Person subject to this
Agreement.
SECTION 13. Agreement of Right Holders. Each holder of a Right, by his
acceptance of the Right, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights will be evidenced by
Right Certificates and transferable only on the registry books of the
Rights Agent pursuant to Section 2;
(c) subject to Sections 4 and 5, the Company and the Rights Agent may
deem and treat the Person in whose name a Right Certificate (or, prior to
the Distribution Date, a certificate representing shares of Common Stock)
is registered as the absolute owner of such certificate and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the certificate representing shares of Common
Stock 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 5(e), shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation;
provided that the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
25
SECTION 14. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of capital stock which
may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 21), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 15. Appointment of Rights Agent. (a) The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
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 upon 10 days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise and shall in no event be liable for the acts or omissions of any such
co- rights agent. If the Company appoints one or more co-rights agents, the
respective duties of the Rights Agent and any co-rights agents shall be as the
Company shall determine.
(b) The Company shall pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the execution or administration of this
Agreement and the exercise and performance of its duties hereunder. The Company
also shall indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, 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 in connection with the administration of this
Agreement or the exercise or performance of its duties hereunder, including the
costs and expenses of defending against any claim of liability.
SECTION 16. Merger or Consolidation 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 be consolidated or combined, or any corporation
resulting from any merger, consolidation or combination to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the
26
part of any of the parties hereto; provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 18. If at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right 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 Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 17. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary that any fact or matter
(including, without limitation, the identity of any "Acquiring Person" and
the determination of "current market price") be proved or established by
the Company prior to taking, suffering or omitting to take any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board, the
President or any Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken, suffered or omitted in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
27
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be responsible (i) in respect of the
validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof), (ii) for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate or (iii) for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 5(e)) or any
adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided herein or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of
any such adjustment). The Rights Agent shall not by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock or other securities will, when
issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered,
all such acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken, suffered or omitted to be taken by it in good faith in
accordance with instructions of any such officer.
28
(h) 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
other 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 the 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 Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or 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 or to any
holders of Rights resulting from any such act, default, neglect or
misconduct, provided that reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the cases may be,
has either not been completed or indicates an affirmative response to
clause 1 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.
(l) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with the administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any Right 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, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
29
SECTION 18. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer
agent of the Common Stock and Preferred Stock by registered or certified mail,
and, subsequent to the Distribution Date, to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 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 and Preferred Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized, in good standing and doing
business under the laws of the United States or of any state of the United
States, having a principal office in the State of New York, which is authorized
under such laws to exercise stock transfer or corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of a corporation described
in clause 18(a). 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 the Preferred Stock, and, subsequent to the
Distribution Date, mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 18, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 19. Redemption. (a) At any time prior to the occurrence of a
Section 8(a)(ii) Event, the Board may, at its option, redeem all but not less
than all of the then outstanding Rights at a redemption price of $0.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being
30
hereinafter referred to as the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish. The Redemption
Price shall be payable, at the option of the Company, in cash, shares of Common
Stock, or such other form of consideration as the Board shall determine.
(b) Immediately upon the action of the Board electing to redeem the Rights
(or at such later time as the Board may establish for the effectiveness of such
redemption) and without any further action and without any notice, the right to
exercise the Rights will terminate and thereafter the only right of the holders
of Rights shall be to receive the Redemption Price for each Right so held. The
Company shall promptly thereafter give notice of such redemption to the Rights
Agent and the holders of the Rights in the manner set forth in Section 22;
provided that the failure to give, or any defect in, such notice shall not
affect the validity of such redemption. 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.
SECTION 20. Exchange. (a) At any time after the occurrence of a Section
8(a)(ii) Event, the Board may, at its option, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to Section 5(e)) 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"). The exchange of the Rights by the Board may be made effective at such
time, on such basis and with such conditions as the Board in its sole
discretion may establish. Notwithstanding the foregoing, (i) the Board shall
not be empowered to effect such exchange at any time after an Acquiring Person,
together with all Affiliates and Associates of such Acquiring Person, becomes
the Beneficial Owner of 50% or more of the shares of Common Stock then
outstanding and (ii) from and after the occurrence of a Section 10 Event, any
Rights that have not been exchanged pursuant to this Section 20(a) shall
thereafter be exercisable only in accordance with Section 10 and may not be
exchanged pursuant to this Section 20(a).
(b) Immediately upon the effectiveness of the action of the Board electing
to exchange any Rights pursuant to Section 20(a) and without any further action
and without any notice, the right to exercise such Rights will terminate and
thereafter the only right 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
thereafter give notice of such exchange to the Rights Agent and the holders of
the Rights to be exchanged in the manner set forth in Section 22; provided that
the failure to
31
give, or any defect in, such notice shall not affect the validity of such
exchange. 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 Rights for shares of
Common Stock 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 Section 5(e)) held by each holder of Rights.
(c) The Company may at its option substitute, and in the event that there
shall not be sufficient shares of Common Stock authorized but not outstanding
to permit the exchange of Rights for Common Stock in accordance with Section
20(a), the Company shall substitute to the extent of such insufficiency, for
each share of Common Stock that would otherwise be issuable upon exchange of a
Right, a number of one one-hundredth of a share of Preferred Stock such that
the current market price (determined pursuant to Section 8(d)) of such number
of one one-hundredth of a share of Preferred Stock is equal to the current
market price (determined pursuant to Section 8(d)) of one share of Common Stock
as of the date of such exchange.
SECTION 21. Notice of Proposed Actions. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class or to make any other distribution (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company) to the holders of Preferred Stock, (ii) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision or combination of outstanding shares of Preferred Stock), (iv) to
effect any consolidation, merger or combination with any other Person, or to
effect or permit any of its Subsidiaries to effect any sale or other transfer,
in one transaction or a series of related transactions, of assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries, taken as a whole, 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 Right, to the extent feasible and in accordance
with Section 22, a notice of such proposed action, which shall specify the
record date for the purposes of any such dividend, distribution or offering of
rights or warrants, or the date on which any such reclassification,
consolidation, merger, combination, sale, transfer, liquidation, dissolution or
winding up is to take place and the date of participation therein by the
holders of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by Section 21(a)(i) or
21(a)(ii) above at least 20 days
32
prior to the record date for determining holders of the Preferred Stock
entitled to participate in such dividend, distribution or offering, and in the
case of any such other action, at least 20 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
Preferred Stock, whichever shall be the earlier. The failure to give notice
required by this Section or any defect therein shall not affect the legality or
validity of the action taken by the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a public filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right,
in accordance with Section 22, 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 8(a)(ii) or 10, as the case may be, and (ii) all references in
Section 21(a) to Preferred Stock shall be deemed thereafter to refer to Common
Stock or other capital stock, as the case may be.
SECTION 22. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right to or on the
Company shall be sufficiently given or made if sent by first-class mail
(postage prepaid) to the address of the Company indicated on the signature page
hereof or such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of Section 18, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail (postage prepaid) to the address of the Rights
Agent indicated on the signature page hereof or such other address as the
Rights Agent shall specify in writing to the Company. Except as otherwise
expressly set forth in this Agreement, notices or demands authorized by this
Agreement to be given or made by the Company or the Rights Agent to the holder
of any Right Certificate or any certificate representing shares of Common Stock
shall be sufficiently given or made if sent by first-class mail (postage
prepaid) to the address of such holder shown on the registry books of the
Company.
SECTION 23. Supplements and Amendments. At any time prior to the
occurrence of Section 8(a)(ii) Event, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of certificates
representing shares of Common Stock. At any time after the occurrence of a
Section 8(a)(ii) Event, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights, provided, however, that no such supplement or amendment
33
may (a) adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
(b) cause this Agreement again to become amendable other than in accordance
with this sentence, or (c) cause the Rights again to become redeemable. Upon
the delivery of a certificate from the Chairman of the Board, the President,
any Vice President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Agreement, the
Rights Agent shall execute such supplement or amendment.
SECTION 24. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
SECTION 25. Determinations and Actions by the Board of Directors. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such 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) under the Exchange Act as in effect on the date
of this Agreement. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including the right and power to (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or exchange or not to redeem or exchange
the Rights or to amend the Agreement).
SECTION 26. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the 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 Right Certificates (and, prior
to the Distribution Date, the certificates representing the shares of Common
Stock).
SECTION 27. 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.
34
SECTION 28. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
SECTION 29. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute one and the
same instrument.
SECTION 30. Descriptive Headings. The captions herein are included for
convenience of reference only, do not constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Executive Vice President,
Chief Legal Officer and Secretary
000 Xxxxx Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Executive Vice President,
Chief Legal Officer and Secretary
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
36
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
LABORATORY CORPORATION OF AMERICA HOLDINGS
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
I, , , of LABORATORY CORPORATION OF AMERICA HOLDINGS, a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("Delaware Law"), in accordance with the provisions thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors on
December 12, 2001, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
SECTION 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 10,000,000. Such number of shares of the Series A Preferred Stock may
be increased or decreased by resolution of the Board of Directors; provided
that no decrease shall reduce the number of shares of Series A Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares issuable upon exercise or conversion of outstanding rights, options or
other securities issued by the Corporation.
SECTION 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable on
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March 31, June 30, September 30 and December 31 of each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of any share or fraction of a share of Series A Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $1.00 and (ii) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash dividends
or other distributions and 100 times the aggregate per share amount of all
non-cash dividends or other distributions (other than (A) a dividend
payable in shares of Common Stock, par value $0.10 per share, of the
Corporation (the "Common Stock") or (B) a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. If the Corporation shall at any time after
December 13, 2001 (the "Rights Declaration Date") pay any dividend on
Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
2(a)(ii) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph 2(a) above immediately
after it declares a dividend or distribution on the Common Stock (other
than as described in clauses 2(a)(ii)(A) and 2(a)(ii)(B) above); provided
that if no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to
the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of Series A Preferred Stock
and such first Quarterly Dividend Payment Date), a dividend of $1.00 per
share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of
A-2
Series A Preferred Stock, unless the date of issue of such shares is on or
before the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue and be
cumulative from the date of issue of such shares, or unless the date of
issue is a date after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date, in which
case dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60
days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of stockholders of the
Corporation. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as a single class on all matters submitted to a
vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon,
the occurrence of such contingency shall xxxx the
A-3
beginning of a period (herein called a "default period") which shall
extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock and any other series of Preferred
Stock then entitled as a class to elect directors, voting together as a
single class, irrespective of series, shall have the right to elect two
Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph 3(c)(iii) hereof or at any annual meeting
of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the
holders of 10% in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of holders of
Common Stock shall not affect the exercise by holders of Preferred Stock
of such voting right. At any meeting at which holders of Preferred Stock
shall initially exercise such voting right, they shall have the right,
voting as a class, to elect Directors to fill such vacancies, if any, in
the Board of Directors as may then exist up to two Directors or, if such
right is exercised at an annual meeting, to elect two Directors. If the
number which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to elect
Directors in any default period and during the continuance of such period,
the number of Directors shall not be increased or decreased except by vote
of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the
Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall have previously
exercised their right to elect Directors during an existing default
period, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of special meeting of holders of Preferred Stock,
which meeting shall thereupon be
A-4
called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph
3(c)(iii) shall be given to each holder of record of Preferred Stock by
mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less
than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
3(c)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph 3(c)(ii) hereof) be filled
by vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock which elected the Director whose office
shall have become vacant. References in this paragraph 3(c) to Directors
elected by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the certificate
of incorporation or bylaws irrespective of any increase made pursuant to
the provisions of paragraph 3(c)(ii) hereof (such number being subject,
however, to change thereafter in any manner provided by law or in the
certificate of incorporation or bylaws). Any vacancies in the Board of
Directors effected by the
A-5
provisions of clauses (y) and (z) in the preceding sentence may be filled
by a majority of the remaining Directors.
(d) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely
affect the powers, preferences or special rights of the Series A Preferred
Stock without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a
class.
(e) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent
shall not be required for taking any corporate action.
SECTION 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such other parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of
stock of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
A-6
(iv) redeem, purchase or otherwise acquire for value any shares
of Series A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of Series A
Preferred Stock and all such other parity stock upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock
of the Corporation unless the Corporation could, under paragraph 4(a),
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
SECTION 6. Liquidation, Dissolution and Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment; provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock, or (2)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
other parity stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or winding up.
If the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of
A-7
Common Stock (by reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under the proviso in clause (1) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 7. Consolidation, Merger, Etc. If the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash or any other property, then in any such case the shares of Series A
Preferred Stock shall at the same time be similarly exchanged for or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
or any other property, as the case may be, into which or for which each share
of Common Stock is changed or exchanged. If the Corporation shall at any time
after the Rights Declaration Date pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
SECTION 9. Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
SECTION 10. Fractional Shares. Series A Preferred Stock may be issued in
fractions that are multiplies of one one-hundredth of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
A-8
IN WITNESS WHEREOF, I have executed and subscribed this Certificate this
__ day of December, 2001.
---------------------------------------
Name:
Title:
A-9
EXHIBIT B
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED OR TRANSFERRED TO, OR HELD
BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN 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
BE NULL AND VOID.
SUMMARY OF RIGHTS
LABORATORY CORPORATION OF AMERICA HOLDINGS
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security The Board of Directors has declared a dividend of
one preferred stock purchase right for each
outstanding share of the Company's Common Stock,
payable to holders of record as of the close of
business on December 21, 2001 (each a "Right" and
collectively, the "Rights").
Transfer Prior to the Distribution Date(1), (i) the Rights
will be evidenced by the certificates for the
Common Stock and not separate Right Certificates
and the registered holders of the Common Stock
shall be deemed to be the registered holders of
the associated Rights, and (ii) the Rights will be
transferable only in connection with the transfer
of the underlying shares of Common Stock.
--------
1 Distribution Date generally means the earlier of:
(1) the 10th day after public announcement that any person or group
has become an Acquiring Person (as defined below), and
(2) the 10th business day after the date of the commencement of a
tender or exchange offer by any person which would, if consummated, result
in such person becoming an Acquiring Person.
B-1
After the Distribution Date, the Rights Agent will
mail separate certificates evidencing the Rights
to each record holder of the Common Stock as of
the close of business on the Distribution Date,
and thereafter the Rights will be transferable
separately from the Common Stock.
Exercise Prior to the Distribution Date, the Rights will
not be exercisable.
After the Distribution Date, but prior to the
occurrence of an event described below under
"Flip-In" or "Flip-Over", each Right will be
exercisable to purchase, for $400 (the "Purchase
Price"), one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par
value $0.001 per share, of the Company.
Acquiring Person Subject to certain exceptions, an "Acquiring
Person" is any person who becomes the beneficial
owner of 15% or more of the Company's Common
Stock. Exceptions include: (i) any person that the
Company's Board of Directors determines has
exceeded the threshold inadvertently and then
promptly divests of the excess shares and (ii)
Roche Holdings Inc. and its affiliates and
associates, as long as it and its affiliates and
associates do not acquire any additional shares of
the Company's Common Stock beyond that reported on
its Schedule 13D dated June 13, 2001.
Flip-In If any person or group becomes an Acquiring
Person, then each Right (other than Rights
beneficially owned by the Acquiring Person and
certain affiliated persons) will entitle the
holder to purchase, for the Purchase Price, a
number of shares of the Company's Common Stock
having a market value of twice the Purchase Price.
Flip-Over If, after any person has become an Acquiring
Person, (1) the Company is involved in a merger or
other business combination in which the Company is
not the surviving corporation or its Common Stock
is exchanged for other securities or assets or (2)
the Company and/or one or more of its
B-2
subsidiaries sell or otherwise transfer assets or
earning power aggregating more than 50% of the
assets or earning power of the Company and its
subsidiaries, taken as a whole, then each Right
will entitle the holder to purchase, for the
Purchase Price, a number of shares of common stock
of the other party to such business combination or
sale (or in certain circumstances, an affiliate)
having a market value of twice the Purchase Price.
Exchange At any time after any person has become an
Acquiring Person (but before any person becomes
the beneficial owner of 50% or more of the
Company's Common Stock), the Board of Directors
may exchange all or part of the Rights (other than
the Rights beneficially owned by the Acquiring
Person and certain affiliated persons) for shares
of Common Stock at an exchange ratio of one share
of Common Stock per Right.
Redemption The Board of Directors may redeem all of the
Rights at a price of $0.001 per Right at any time
prior to the time that any person becomes an
Acquiring Person.
Expiration The Rights will expire on December 13, 2011,
unless earlier exchanged or redeemed.
Amendments Prior to any person becoming an Acquiring Person,
the Rights Agreement may be amended in any
respect.
After any person has become an Acquiring Person,
the Rights Agreement may not be amended in any
respect that would adversely affect the Rights
holders (other than any Acquiring Person and
certain affiliated persons) or cause the Rights
again to become redeemable.
Voting Rights Rights holders have no rights as a stockholder of
the Company, including the right to vote and to
receive dividends.
B-3
Antidilution Provisions The Rights Agreement includes standard
antidilution provisions designed to protect the
efficacy of the Rights.
Taxes While the dividend of the Rights will not be
taxable to stockholders or to the Company,
stockholders or the Company may, depending upon
the circumstances, recognize taxable income in the
event that the Rights become exercisable as set
forth above.
------------------
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, as amended from time to
time, the complete terms of which are hereby incorporated by reference.
------------------
B-4
EXHIBIT C
[FORM OF RIGHT CERTIFICATE]
No. R- _______________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 13, 2011 AND THE DATE ON WHICH
THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET
FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR
AN 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 BE NULL AND VOID.
RIGHT CERTIFICATE
LABORATORY CORPORATION OF AMERICA HOLDINGS
This Right Certificate certifies that ______________________, or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of December 13, 2001 (the
"Rights Agreement") between LABORATORY CORPORATION OF AMERICA HOLDINGS, a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent")) to purchase from the Company, at any time after
the Distribution Date and prior to the Expiration Date, [One] one-hundredth[s]
of a fully paid, nonassessable share of Series A Participating Cumulative
Preferred Stock (the "Preferred Stock") of the Company at a purchase price of
$400 per one one-hundredth of a share (the "Purchase Price"), payable in lawful
money of the United States of America, upon surrender of this Right
Certificate, with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights Agent
designated for such purpose.
Terms used herein and not otherwise defined herein shall have the meanings
given to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the number
and kind of shares issuable upon exercise of each Right) and the Purchase Price
set forth above are as of ____________, 20__, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 8(a)(ii) Event, if the Rights evidenced
by this Right Certificate are beneficially owned by (a) an Acquiring Person or
an Associate or Affiliate of such Acquiring Person, (b) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such, such Rights shall
become null and void without any further action, and no holder hereof shall
have any rights whatsoever with respect to such Rights.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
At any time after the Distribution Date and prior to the Expiration Date,
any Right Certificate or Certificates may, upon the terms and subject to the
conditions set forth in the Rights Agreement, be transferred or exchanged for
another Right Certificate or Certificates evidencing a like number of Rights as
the Right Certificate or Certificates surrendered. Any registered holder
desiring to transfer or exchange any Right Certificate or Certificates shall
surrender such Right Certificate or Certificates (with, in the case of a
transfer, the form of assignment and certificate on the reverse side thereof
duly executed) to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose.
Subject to the provisions of the Rights Agreement, the Board of Directors
of the Company may, at its option,
(a) at any time prior to the occurrence of a Section 8(a)(ii) Event
redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.001 per Right as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Rights Agreement; or
C-2
(b) at any time after the occurrence of a Section 8(a)(ii) Event
exchange all or part of the then outstanding Rights (which shall not
include Rights that have become void pursuant to Section 5(e) of the
Rights Agreement) 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 of the Rights Agreement. If the Rights shall be exchanged in part,
the holder of this Right Certificate shall be entitled to receive upon
surrender hereof another Right Certificate or Certificates for the number
of whole Rights not exchanged.
The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon the exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised an amount in cash equal to the same fraction of the
current market price of one one-hundredth of a share of Preferred Stock. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Certificates for
the number of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital
stock which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
C-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of _______________________, 20__
LABORATORY CORPORATION OF
AMERICA HOLDINGS
By:
---------------------------------
Title:
Attest:
-----------------------------------------
Secretary
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By:
--------------------------------------
Authorized Signatory
C-4
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED______________________________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _____________________, 20__
______________________________
Signature
Signature Guaranteed:
C-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ___are ___are not being
assigned 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
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 20 __ __________________________________________
Signature
------------------
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
------------------
C-6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Right Certificate.)
To: LABORATORY CORPORATION OF AMERICA HOLDINGS
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase shares of Preferred 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 securities be issued in the
name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ________________, 20__
____________________________________
Signature
Signature Guaranteed:
C-7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ___are ___are not being
exercised 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
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 20 __ ____________________________________
Signature
------------------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
------------------
C-8
