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EXHIBIT 1
STOCKHOLDER RIGHTS AGREEMENT
dated as of
June 25, 1997
between
CORAM HEALTHCARE CORPORATION
and
BANKBOSTON, N.A.
as Rights Agent
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STOCKHOLDER RIGHTS AGREEMENT
Table of Contents
Page
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ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
THE RIGHTS
2.1 Summary of Rights . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2 Legend on Stock Certificates . . . . . . . . . . . . . . . . . . . .
2.3 Exercise Price; Exercise of Rights; Detachment of
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4 Adjustments to Exercise Price; Number of Rights;
Securities Purchasable . . . . . . . . . . . . . . . . . . . .
2.5 Date On Which Exercise Is Effective . . . . . . . . . . . . . . . . .
2.6 Execution, Authentication, Delivery and Dating of
Rights Certificates . . . . . . . . . . . . . . . . . . . . .
2.7 Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates . . . . . . . . . . . . . . . . . . . . . . . . .
2.9 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . .
2.10 Delivery and Cancellation of Certificates . . . . . . . . . . . . . .
2.11 Agreements of Rights Holders . . . . . . . . . . . . . . . . . . . .
2.12 Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . . . . . .
2.13 Certificate of Adjusted Exercise Price or Number
of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
THE RIGHTS AGENT
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . .
3.3 Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . .
3.4 Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . .
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Table of Contents
(Continued)
Page
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ARTICLE IV
MISCELLANEOUS
4.1 Redemption, Termination and Exchange . . . . . . . . . . . . . . . .
4.2 Provision in Event of Insufficient Shares of
Series X Preferred Stock . . . . . . . . . . . . . . . . . . .
4.3 Issuance of New Rights Certificates . . . . . . . . . . . . . . . . .
4.4 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . .
4.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
4.6 Transactions After the Separation Time . . . . . . . . . . . . . . .
4.7 Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . .
4.8 Holder of Rights Not Deemed a Stockholder . . . . . . . . . . . . . .
4.9 Notice of Proposed Actions . . . . . . . . . . . . . . . . . . . . .
4.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.11 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . .
4.12 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.13 Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . .
4.14 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . .
4.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
Exhibit A Form of Certificate of Designation,
Preferences and Rights of Series X Participating
Preferred Stock
Exhibit B Form of Summary of Stockholder Rights
Agreement
Exhibit C Form of Rights Certificate (Together
With Form of Election to Purchase)
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STOCKHOLDER RIGHTS AGREEMENT
This Stockholder Rights Agreement (the "Agreement"), is entered
into as of June 25, 1997, between CORAM HEALTHCARE CORPORATION, a Delaware
corporation (the "Company"), and BANKBOSTON, N.A., a national banking
association, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WHEREAS, the Board of Directors of the Company authorized a
stockholder rights plan designed to provide protection to the Company's
stockholders in the event any person should attempt to acquire a 15% or greater
equity interest in the Company at a price, under circumstances or on terms that
are not in the best interests of the Company and its stockholders;
WHEREAS, the Board of Directors of the Company has (a) authorized
and declared a dividend of one contingent preferred stock purchase right
("Right") in respect of each share of Common Stock (as hereinafter defined)
held of record as of the close of business on July 9, 1997 (the "Record Time")
and (b) authorized the issuance of one Right in respect of each share of Common
Stock that shall become outstanding after the Record Time and prior to the
Separation Time (as hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the
Separation Time, to purchase that number of Units (as hereinafter defined) of a
share of the Company's Series X Preferred Stock (as hereinafter defined) which
equals the quotient obtained by dividing the Exercise Price (as hereinafter
defined) by fifty percent (50%) of the Market Price (as hereinafter defined)
per share of Common Stock, pursuant to the terms and subject to the conditions
set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act
on behalf of the Company, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of Rights
Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, the parties hereto agree as
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follows:
ARTICLE I - CERTAIN DEFINITIONS
I.1 Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who has (i)
acquired or obtained the right to acquire Beneficial Ownership of 15% or more
of the outstanding shares of Common Stock or (ii) has commenced or announced an
intention to commence a tender or exchange offer which would result in that
Person obtaining Beneficial Ownership of 15% or more of the outstanding shares
of Common Stock; provided, however, that the term "Acquiring Person" shall not
include the Company, any wholly-owned Subsidiary of the Company, any employee
stock ownership or other employee benefit plan of the Company or of a
Subsidiary of the Company (a "Plan"), any Person holding Common Stock for or
pursuant to the terms of any such Plan, or any Exempted Person.
Notwithstanding the foregoing:
(x) any Person who acquires the Beneficial Ownership of 15% or
more of the shares of Common Stock of the Company either (i) by reason
of share purchases by the Company reducing the number of shares of
Common Stock outstanding (provided such Person does not thereafter
acquire additional shares of Common Stock), or (ii) inadvertently, if
such Person notifies the Board of Directors of such inadvertent purchase
within five business days and within two business days after such notice
divests itself of enough shares of Common Stock so as to no longer have
the Beneficial Ownership of 15% or more of the outstanding Common Stock,
will not be an Acquiring Person; and
(y) any Person who acquires shares of Common Stock or other
securities of the Company resulting in Beneficial Ownership of Common
Stock within the meaning hereof directly from the Company in a
transaction expressly approved by the Company's Board of Directors (a
"Direct Acquisition") shall not, solely as a result
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of such acquisition, become an Acquiring Person; provided, however,
that the shares or other securities acquired in such Direct Acquisition
shall be counted with respect to determining whether the Beneficial
Owner thereof is an Acquiring Person following any subsequent
acquisition or series of acquisitions (other than one or more Direct
Acquisitions) in the aggregate of Beneficial Ownership of 2% or more of
the outstanding shares of Common Stock.
(b) "Affiliate", when used to indicate a relationship
with a specified Person, shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such specified Person.
(c) "Associate" of a specified Person shall mean (i)
any corporation, partnership or other organization of which such specified
Person is an officer or partner or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities, (ii) any trust or other
estate in which such specified Person has a substantial beneficial interest or
as to which such specified Person serves as trustee or in a similar fiduciary
capacity, (iii) any relative or spouse of such specified Person, or any
relative of such spouse, who has the same home as such specified Person or who
is a director or officer of the Company or an Affiliate of the Company and (iv)
any Person who is a director, officer, partner or trustee of such specified
Person or of any corporation, partnership or other organization (other than the
Company or any wholly owned Subsidiary of the Company) that is an Affiliate or
Associate of such specified Person.
(d) A Person shall be deemed the "Beneficial Owner",
and to have "Beneficial Ownership", of, and to "Beneficially Own", any
securities as to which such Person or any of such Person's Affiliates or
Associates is or may be deemed to be the Beneficial Owner pursuant to Rule
13d-3 or Rule 13d-5 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (or pursuant to any comparable or successor laws or regulations
or, if such Rules shall be rescinded and there shall be no comparable or
successor laws or regulations, pursuant to Rule 13d-3 or Rule 13d-5 as in
effect on the date of this Agreement), as well as any
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securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become a Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options,
or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner, or to have Beneficial Ownership, of, or to Beneficially Own,
any security (i) solely because such Person or any of such Person's Affiliates
or Associates has or shares the power to vote or direct the voting of such
security pursuant to a revocable proxy 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, except if such power (or the
arrangements relating thereto) is then reportable under Item 6 of Schedule 13D
under the Exchange Act (or any similar provision of a comparable or successor
report) or (ii) held for or pursuant to the terms of any Plan; and provided,
however, that nothing in this paragraph 1.1(d) shall cause a Person engaged in
business as an underwriter of securities to be the Beneficial Owner of, to have
Beneficial Ownership of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition. For purposes of this Agreement, in determining the percentage of
the outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, all shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding.
(e) "Bridge Note Investors" shall mean ▇▇▇▇▇▇▇, ▇▇▇▇▇
Credit Partners L.P., Cerberus Partners, L.P., and Foothill Capital Corporation
(together with the such persons' Affiliates and Associates). Notwithstanding
the foregoing, if ▇▇▇▇▇▇▇, Sachs Credit Partners L.P., Cerberus Partners, L.P.,
and Foothill Capital Corporation (together with such persons' Affiliates and
Associates) in the aggregate acquire Beneficial Ownership in excess of 25% of
the outstanding Common Stock, such persons shall no longer be the Bridge Note
Investors for purposes of this Agreement.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking
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institutions in the City of New York are generally authorized or obligated by
law or executive order to close.
(g) "close of business" on any given day shall mean the
time on such date (or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the offices of the transfer agent for the
Common Stock (or, after the Separation Time, the offices of the Rights Agent)
are closed to the public.
(h) "Common Stock" shall mean the Common Stock, par
value $.001 per share, of the Company, or, in the event of a subdivision,
combination, or consolidation with respect to such Common Stock, the Common
Stock resulting from such subdivision, combination, or consolidation.
(i) "Exempted Person" shall mean any Institutional
Investor, any Minority Investor and the Bridge Note Investors. Notwithstanding
the foregoing, if (i) any Institutional Investor or Minority Investor acquires
Beneficial Ownership of the outstanding Common Stock in excess of that
percentage expressly approved in writing by the Board of Directors of the
Company or (ii) the Bridge Note Investors acquires Beneficial Ownership of the
outstanding Common Stock in excess of 25%, in either case (y) by reason of
share purchases by the Company reducing the number of shares of Common Stock
outstanding (provided such Exempted Person does not acquire additional shares
of Common Stock) or (z) inadvertently, if such Exempted Person notifies the
Board of Directors of such inadvertent purchase within five business days and
within two business days after such notice divests itself of enough shares of
Common Stock so as to no longer have the Beneficial Ownership of the
outstanding Common Stock in excess of the specified percentage, such
Institutional Investor, Minority Investor or Bridge Note Investors will not
cease to be an Exempted Person.
(j) "Exercise Price" shall initially be $10, subject to
adjustment from time to time as provided in Section 2.4 hereof.
(k) "Expiration Time" shall be (i) the close of
business on June 25, 1998, one year after the date of adoption hereof by the
Board of Directors of the Company; provided, however, that prior to such date
the Board of
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Directors may act to extend the Expiration Time such date by one year, or (ii)
such successive annual date as set by action of the Board of Directors of the
Company pursuant to the proviso of the immediately preceding clause, which date
may be further extended in accordance with such proviso, but in any event the
Expiration Time shall be no later than the close of business on June 25, 2007.
Whenever an extension to the Expiration Time is made by the Board of Directors
of the Company, the Company shall (i) promptly prepare a certificate setting
forth such extension date, (ii) promptly file with the Rights Agent and with
the transfer agent for the Series X Preferred Stock, if any, and the transfer
agent for the Common Stock a copy of such certificate and (iii) mail a notice
thereof to each holder of Rights.
(l) "Institutional Investor" shall mean any Person
(together with such Institutional Investor's Affiliates and Associates) (i)
who, with the express written approval of the Board of Directors of the
Company, acquires aggregate Beneficial Ownership of 15% or more but less than
or equal to that percentage expressly approved in writing by the Board of
Directors of the Company, but in no event greater than 25% of the outstanding
Common Stock of the Company, provided, however, that the Institutional Investor
acquires such Beneficial Ownership in the ordinary course of business and not
with the purpose nor with the effect of changing or influencing the control of
the Company, nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction subject to Rule 13d-
3(b) of the Exchange Act, and (ii) who is: (A) a broker or dealer registered
under Section 15 of the Exchange Act; (B) a bank as defined in Section 3(a)(6)
of the Exchange Act; (C) an insurance company as defined in Section 3(a)(19) of
the Exchange Act; (D) an investment company registered under Section 8 of the
Investment Company Act of 1940; (E) an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940; (F) an employee benefit
plan or pension fund which is subject to the provisions of the Employee
Retirement Income Security Act of 1974 or an endowment fund; (G) a parent
holding company, provided the aggregate amount held directly by the parent, and
directly and indirectly by its subsidiaries which are not persons specified in
Rule 13d-1(b)(1)(ii)(A) through (F) of the Exchange Act, does not exceed one
percent of the securities of the subject class; or (H) a group, provided that
all the
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members are persons specified in Rule 13d-1(b)(1)(ii)(A) through (G) of the
Exchange Act.
(m) "Market Price" per share of Common Stock on any
date of determination shall mean the average of the daily closing prices per
share of Common Stock (determined as described below) on each of the 20
consecutive Trading Days through and including the fifth Trading Day
immediately preceding such determination date; provided, however, that if the
first public announcement of an event described in Section 2.4 hereof occurs
within such 20 Trading Day period, Market Price per share of Common Stock on
such determination date shall mean the average of the daily closing prices per
share of Common Stock on each Trading Day from and including the day after the
date of such announcement through and including the fifth Trading Day
immediately preceding such determination date. The closing price per share of
Common Stock on any date shall be the last sale price, regular way, or, in case
no such sale takes place on such date, the average of the closing bid and asked
prices, regular way, for each share of Common Stock, in either case as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Common Stock is not then listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if the
Common Stock is not then 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 for each share of Common Stock 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 Common Stock is not then 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 of Directors of the Company; provided, however, that if on any such date
the Common Stock is not listed or admitted for trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share
of Common Stock on such date shall mean the fair value per share of Common
Stock on such date as
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determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm with respect
to the fair value per share of Common Stock. Market Price per share of Series
X Preferred Stock on any date of determination shall be determined in the same
manner set forth above for Common Stock, other than as provided in the proviso
to the immediately preceding sentence. If the Market Price per share of Series
X Preferred Stock cannot be determined in the manner provided above, or if the
Series X Preferred Stock is not publicly held or listed or traded in a manner
described above, the Market Price per share of Series X Preferred Stock shall
be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as subdivisions or combinations of
stock, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Market Price per
share of Common Stock. Market Price of a Unit shall be equal to the Market
Price of one share of Series X Preferred Stock divided by 100.
(n) "Minority Investor" shall mean any Person (together with
such Minority Investor's Affiliates and Associates) who, with the express,
written approval of the Board of Directors of the Company, acquires aggregate
Beneficial Ownership of 15% or more but less than or equal to that percentage
expressly approved in writing by the Board of Directors of the Company, but in
no event greater than 25% of the outstanding Common Stock of the Company.
(o) "Person" shall mean any individual, firm,
partnership, association, group (as such term is used in Rule 13d-5 under the
Exchange Act, as in effect on the date of this Agreement), corporation or other
entity.
(p) "Series X Preferred Stock" shall mean the Series X
Participating Preferred Stock, par value $.001 per share, of the Company having
the rights, powers, privileges and restrictions, qualifications and limitations
set forth in the Certificate of Designation, Preferences and Rights of Series X
Participating Preferred Stock in the form attached as Exhibit A.
(q) "Separation Time" shall mean the close of business
on the tenth Business Day after (i) a public
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announcement establishing that an Acquiring Person has become such or (ii) a
resolution by the Board of Directors stating that the majority of the Board of
Directors is aware that a Person has become an Acquiring Person; provided,
however, that if the foregoing results in the Separation Time being prior to
the Record Time, the Separation Time shall be extended to the Record Time.
(r) "Subsidiary" of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the equity interest is Beneficially Owned,
directly or indirectly, or otherwise controlled by such Person.
(s) "Trading Day" shall mean a day on which the
principal national securities exchange or over-the-counter market on which the
Common Stock is listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not then listed or admitted to trading on
any national securities exchange or over-the-counter market, a Business Day.
(t) A "Unit" of Series X Preferred Stock shall mean one
one-hundredth of a share of Series X Preferred Stock.
(u) "Voting Stock" shall mean (i) a Unit of Series X
Preferred Stock, (ii) a share of Common Stock and (iii) any other share of
capital stock of the Company entitled to vote generally in the election of
directors or entitled to vote together with the Common Stock in respect of any
merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
II - THE RIGHTS
II.1 Summary of Rights. As soon as practicable after
the date hereof, the Company will mail to each holder of record of Common Stock
as of the Record Time, at such holder's address as shown by the records of the
Company, a copy of a Summary of Stockholder Rights Agreement in substantially
the form attached as Exhibit B.
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II.2 Legend on Stock Certificates.
I Certificates for the Common Stock issued after the Record Time but prior to
the close of business on the Separation Time shall evidence one Right for each
share of Common Stock represented thereby and shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
Until the earlier of the Separation Time or the Expiration Time
(as such terms are defined in the Stockholder Rights Agreement
referred to below), this certificate also evidences and entitles
the holder hereof to certain Rights as set forth in a Stockholder
Rights Agreement, dated as of June 25, 1997 as amended,
supplemented or otherwise modified from time to time, (the
"Stockholder Rights Agreement"), between CORAM HEALTHCARE
CORPORATION (the "Company") and BANKBOSTON, N.A. as Rights Agent,
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. Under certain circumstances, as set forth in the
Stockholder Rights Agreement, such Rights may expire, may become
void (if they are "Beneficially Owned" by an "Acquiring Person"
or an "Affiliate" or "Associate" thereof, as such terms are
defined in the Stockholder Rights Agreement, or a transferee of
any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this certificate.
The Company will mail or arrange for the mailing of a copy of the
Stockholder Rights Agreement to the holder of this certificate
without charge within five days after the receipt of a written
request therefor.
Notwithstanding the absence of the foregoing legend, certificates representing
shares of Common Stock that are issued and outstanding at the Record Time shall
evidence one Right for each share of the Common Stock evidenced thereby.
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II.3 Exercise Price; Exercise of Rights; Detachment of Rights.
(a) Subject to the terms and conditions of this
Agreement, after the Separation Time, each Right will entitle the holder
thereof to receive, upon the exercise thereof and payment of the Exercise
Price, that number of Units of Series X Preferred Stock which equals the
quotient obtained by dividing the Exercise Price by fifty percent (50%) of the
Market Price per share of Common Stock at the Separation Time, which number and
type of securities are subject to adjustment as provided in Section 2.12 hereof
and in Section 2.4 hereof. The Company shall calculate the Exercise Price and
provide the Rights Agent with notice of such Exercise Price immediately after
the Separation Time.
(b) Until the Separation Time, (i) no Right may be
exercised and (ii) each Right will be evidenced by the certificate for the
associated share of Common Stock (together, in the case of certificates issued
prior to the Record Time, with the letter or other communication mailed to each
holder of record of Common Stock pursuant to Section 2.1 hereof) and will be
transferable and/or convertible only together with, and will be transferred by
a transfer or a conversion of, such associated share (whether with or without
such letter or other communication).
(c) After the Separation Time and prior to the
Expiration Time, and subject to the provisions of clause (g) and the second
paragraph of clause (h) of this Section 2.3, the Rights (i) may be exercised
and (ii) will be transferable independently of the Common Stock. As soon as
practicable following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than a holder
known by the Rights Agent to be an Acquiring Person or an Affiliate or
Associate thereof), at such holder's address as shown by the records of the
Company (the Company hereby agreeing to furnish copies of such records to the
Rights Agent for this purpose), (x) a certificate (a "Rights Certificate") in
substantially the form of Exhibit C hereto appropriately completed,
representing the number of Rights held by such holder at the Separation Time
and having such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as
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are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or quotation
system on which the Rights may from time to time be listed or traded, or to
conform to usage, and (y) a disclosure statement describing the Rights.
(d) Subject to the provisions of clause (g) and the
second paragraph of clause (h) of this Section 2.3, Rights may be exercised on
any Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Purchase (an "Election to Purchase") and certificate
substantially in the form attached to the Rights Certificate duly completed,
accompanied by payment of the Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax or charge that
may be payable in respect of any transfer involved in the transfer or delivery
of Rights Certificates or the issuance or delivery of certificates for Series X
Preferred Stock or depositary receipts (or both) in a name other than that of
the holder of the Rights being exercised. Payment of the Exercise Price for
the Units purchased upon the exercise of the Rights hereunder shall be made by
delivery to the Company of (i) cash, (ii) certified check or money order
payable to the order of the Company, (iii) Common Stock, (iv) Rights to
purchase Units of the Company's Series X Preferred Stock or (v) in such other
form as may be determined by the Board of Directors of the Company, in each
case in an amount equal to the aggregate Exercise Price of such Rights. For
the purposes of the preceding sentence, (x) Common Stock shall be valued at its
Market Price, and (y) Rights to purchase Units of the Company's Series X
Preferred Stock shall be valued at an amount equal to the fair market value of
the Units subject to the Rights (as determined by the Company's Board of
Directors) less the Exercise Price.
(e) Upon receipt of a Rights Certificate, with an
Election to Purchase and certificate duly executed accompanied by payment as
set forth in Section 2.3(d) above, and subject to the provisions of clause (g)
and the second paragraph of clause (h) of this Section 2.3, the Rights Agent
will thereupon promptly (i)(A) requisition from the Company's
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transfer agent certificates for the number of shares of stock to be purchased
(the Company hereby irrevocably authorizing its transfer agent to comply with
all such requisitions) and (B) if the Company elects pursuant to Section 4.5
hereof not to issue certificates representing fractional shares of stock,
requisition from the depositary selected by the Company cash or depositary
receipts, as the case may be, representing the fractional shares of stock to be
purchased and (ii) after receipt of such certificates or depositary receipts,
deliver such certificates or depositary receipts to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder.
(f) If the holder of any Rights shall exercise fewer
than all the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns,
subject to the provisions of Section 4.5 hereof.
(g) Anything in this Agreement or in the Rights
Certificates to the contrary notwithstanding, Rights Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof or any transferee of any
of the foregoing cannot validly be transferred or exercised and shall be for
all purposes void.
(h) The Company covenants and agrees that it will (i)
cause to be reserved and kept available until the Expiration Time out of its
authorized and unissued shares of capital stock a number of shares of Series X
Preferred Stock and/or Common Stock or other preferred stock or equity
securities of the Company satisfactory for delivery pursuant to Section 4.2
hereof, sufficient to permit the exercise in full of all outstanding Rights;
(ii) take all such action as may be necessary to ensure that all shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be
duly and validly authorized, executed, issued and delivered and fully paid and
nonassessable; (iii) take all such action as may be necessary to comply with
any applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, and the rules and regulations
thereunder, and any other applicable
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law, rule or regulation, in connection with the issuance of any shares upon
exercise of Rights; (iv) use its best efforts to cause all shares issued upon
exercise of Rights to be listed on a national securities exchange or traded in
the over-the-counter market and quoted on NASDAQ upon issuance; and (v) pay
when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any shares issued upon the exercise of Rights,
provided that the Company shall not be required to pay any transfer tax or
charge that may be payable in respect of any transfer involved in the transfer
or delivery of Rights Certificates or the issuance or delivery of certificates
for shares in a name other than that of the holder of the Rights being
transferred or exercised.
The Company may temporarily suspend, at any time, the
exercisability of the Rights for such period of time as may be reasonably
necessary to prepare and file such documents and to perform such acts as are
required to ensure compliance with the Securities Act, the Exchange Act, the
rules and regulations thereunder, the "blue sky" laws of the various states and
any other applicable law, rule or regulation, as provided in clause (iii)
above. The Company may also suspend such exercisability for such period of
time as may be reasonably necessary to permit any registration statement or
statements required by the Securities Act or the Exchange Act or any
registration or qualification required by any other applicable law, rule or
regulation, to be effective with respect to any securities to be issued upon
exercise of Rights. Upon any suspension of exercisability, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained or
the exercise thereof shall not be permitted under applicable law.
II.4 Adjustments to Exercise Price; Number of Rights; Securities
Purchasable.
(a) If the Company shall at any time after the Record
Time and prior to the Expiration Time (i) declare or pay a dividend on Common
Stock payable in Common Stock (or
-▇▇-
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇), (▇▇) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares of Common
Stock, the Exercise Price and number of Rights outstanding, or, if the payment
or effective date therefor shall occur after the Separation Time, the
securities purchasable upon exercise of Rights shall be adjusted in the manner
set forth below. If the Exercise Price and number of Rights are to be
adjusted, (x) the Exercise Price in effect after such adjustment will be equal
to the Exercise Price in effect immediately prior to such adjustment divided by
the number of shares of Common Stock (or other capital stock) (the "Expansion
Factor") that a holder of one share of Common Stock immediately prior to such
dividend, subdivision or combination would hold thereafter as a result thereof
and (y) each Right held prior to such adjustment will become that number of
Rights equal to the Expansion Factor, and the adjusted number of Rights will be
deemed to be distributed among the shares of Common Stock with respect to which
the original Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision or combination, so that each
such share of Common Stock will have exactly one Right associated with it. If
the securities purchasable upon exercise of Rights are to be adjusted, the
securities purchasable upon exercise of each Right after such adjustment will
be the securities that a holder of the securities purchasable upon exercise of
one Right immediately prior to such dividend, subdivision or combination would
hold immediately thereafter. If after the Record Time and prior to the
Expiration Time the Company shall issue any shares of capital stock other than
Common Stock in a transaction of a type described in the first sentence of this
Section 2.4(a) or shall issue any Voting Stock in a reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), shares of such capital stock shall be treated herein as nearly
equivalent to shares of Common Stock as may be practicable and appropriate
under the circumstances and the Company and the Rights Agent agree to amend
this Agreement to effect such treatment.
If the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in Section 2.4(b) hereof, each such share of Common
Stock so
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issued shall automatically have one new Right associated with it, which Right
shall be evidenced by the certificate representing such share.
(b) (i) If the Company shall at any time after the Record
Time and prior to the Expiration Time (A) declare or pay any dividend on the
Series X Preferred Stock payable in Voting Stock, (B) subdivide the outstanding
Series X Preferred Stock, (C) combine the outstanding Series X Preferred Stock
into a smaller number of shares of Series X Preferred Stock or (D) issue Voting
Stock in a reclassification of the Series X Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, and in each such
event, the number and kind of Units of Series X Preferred Stock or other
securities issuable upon the exercise of a Right on such date shall be
proportionately adjusted so that the holder of any Right exercised on or after
such date shall be entitled to receive, upon the exercise thereof and payment
of the Exercise Price, the aggregate number and kind of Units of Series X
Preferred Stock or other securities or other property, as the case may be,
that, if such Right had been exercised immediately prior to such date and at a
time when such Right was exercisable and the transfer books of the Company were
open, such holder would have owned upon such exercise and would have been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs on or prior to the Separation Time that
would require an adjustment under this Section 2.4(b)(i), the adjustment
provided for in this Section 2.4(b)(i) shall be made prior to giving effect to
Section 2.3(a) or Section 2.12 hereof.
(ii) If the Company shall at any time after the Record Time
and prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Series X Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution solely of Voting Stock for which an adjustment is required under
Section 2.4(b)(i) hereof or a regular quarterly cash dividend), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the
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20
numerator of which shall be equal to the difference of the Market Price per
share of Series X Preferred Stock on such record date minus the fair market
value of the portion of the securities or assets to be so distributed
applicable to one share of Series X Preferred Stock, and the denominator of
which shall be equal to such Market Price per share of Series X Preferred
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and if such a distribution is not so made, the Exercise Price shall
be adjusted to be the Exercise Price that would then be in effect if such
record date had not been fixed. If the Company fixes a record date for the
making of a distribution of both Voting Stock and other securities or assets
(other than a regular quarterly cash dividend), such that the provisions of
Section 2.4(b)(i) and Section 2.4(b)(ii) hereof would otherwise be applicable,
then the provisions of each such section shall be applicable to each such
distribution, respectively, according to the terms of each such section. If an
event occurs on or prior to the Separation Time that would require an
adjustment under this Section 2.4(b)(ii), the adjustment provided for in this
Section 2.4(b)(ii) shall be made prior to giving effect to Section 2.3(a) or
Section 2.12 hereof.
(c) Each adjustment made pursuant to this Section 2.4
shall be made as of (i) the record date for the applicable issuance and
distribution, in the case of an adjustment made pursuant to Section 2.4(b)
above, and (ii) the payment or effective date for the applicable dividend,
subdivision or combination, in the case of an adjustment made pursuant to
Section 2.4(a) above.
(d) Each adjustment to the Exercise Price made pursuant
to this Section 2.4 shall be calculated to the nearest cent. Whenever an
adjustment to the Exercise Price is made pursuant to this Section 2.4, the
Company shall (i) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (ii)
promptly file with the Rights Agent and with the transfer agent for the Series
X Preferred Stock, if any, and the transfer agent for the Common Stock a copy
of such certificate and (iii) mail a brief summary thereof to each holder of
Rights.
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21
(e) Irrespective of any adjustment or change in the
securities purchasable upon exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the securities so
purchasable that were expressed in the initial Rights Certificates issued
hereunder.
II.5 Date On Which Exercise Is Effective. Each person in whose
name any certificates for shares are issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price for such Rights (and any applicable taxes and
other governmental charges payable by the exercising holder hereunder) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the stock
transfer books of the Company are open.
II.6 Execution, Authentication, Delivery and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf
of the Company by its Chairman of the Board, President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Company learns of the Separation Time, the
Company will notify the Rights Agent of such Separation Time and will deliver
Rights Certificates executed by the Company to the Rights Agent for
countersignature,
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and the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof.
No Rights Certificate shall be valid for any purpose until manually
countersigned by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
II.7 Registration, Registration of Transfer and Exchange.
(a) The Company will cause to be kept a register (the
"Rights Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed "Rights Registrar" for the
purpose of maintaining the Rights Register for the Company and registering
Rights and transfers of Rights as herein provided. If the Rights Agent shall
cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Sections 2.3(g) and 2.7(c) hereof, the Company
will execute, and the Rights Agent will countersign and deliver, in the name of
the holder or the designated transferee or transferees, as required pursuant to
the holder's instructions, one or more new Rights Certificates evidencing the
same aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Subject to the provisions of Section 2.3(g) hereof,
all Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Company, and such Rights
shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form
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23
satisfactory to the Company or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder's attorney-in-fact duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
II.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.
(a) If any mutilated Rights Certificate is surrendered
to the Rights Agent prior to the Expiration Time, the Company shall execute and
the Rights Agent shall countersign and deliver in exchange therefor a new
Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Company and the
Rights Agent prior to the Expiration Time (i) evidence to their satisfaction of
the destruction, loss or theft of any Rights Certificate and (ii) such security
or indemnity as may be required by them to save each of them and any of their
agents harmless, then, in the absence of notice to the Company or the Rights
Agent that such Rights Certificate has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Rights Agent shall
countersign and deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights Certificate evidencing the same number of Rights as
did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.8, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Rights Agent) connected therewith.
(d) Subject to the provisions of Section 2.3(g) hereof,
every new Rights Certificate issued pursuant to this Section 2.8 in lieu of any
destroyed, lost or stolen Rights Certificate shall evidence an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any
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24
time enforceable by anyone, and shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Rights duly issued
hereunder.
II.9 Persons Deemed Owners. Prior to due presentment of
a Rights Certificate (or, prior to the Separation Time, the associated Common
Stock certificate) for registration of transfer, the Company, the Rights Agent
and any agent of the Company or the Rights Agent may deem and treat the person
in whose name such Rights Certificate (or, prior to the Separation Time, such
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby for all purposes whatsoever. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Right shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
II.10 Delivery and Cancellation of Certificates. All
Rights Certificates surrendered upon exercise or for redemption, registration
or transfer or exchange shall, if surrendered to any person other than the
Rights Agent, be delivered to the Rights Agent and, in any case, shall be
promptly cancelled by the Rights Agent. The Company may at any time deliver to
the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Rights Certificates so delivered shall be promptly
cancelled by the Rights Agent. No Rights Certificates shall be countersigned
in lieu of or in exchange for any Rights Certificates cancelled as provided in
this Section 2.10, except as expressly permitted by this Agreement. The Rights
Agent shall destroy all cancelled Rights Certificates and deliver a certificate
of destruction to the Company.
II.11 Agreements of Rights Holders. Every holder of
Rights by accepting such Rights consents and agrees with the Company and the
Rights Agent and with every other holder of Rights that:
(a) prior to the Separation Time, each
Right will be transferable only together with, and will be transferred by a
transfer of, the associated share of Common Stock;
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25
(b) after the Separation Time, the Rights Certificates
will be transferable only on the Rights Register as provided herein;
(c) each Right Beneficially Owned by an Acquiring
Person or an Affiliate or Associate thereof or any transferee of any of the
foregoing cannot validly be transferred or exercised and shall for all purposes
be void; to effectuate the foregoing, each Rights Certificate shall be
transferable or exercisable only if the holder so transferring or exercising
shall certify, for the benefit of all holders of Rights, that such holder is
not an Acquiring Person or an Affiliate or Associate of an Acquiring Person and
that, to the best of such holder's knowledge, no Rights evidenced by such
Rights Certificates have ever been Beneficially Owned by an Acquiring Person or
an Affiliate or Associate of an Acquiring Person;
(d) prior to due presentment of a Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation Time, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on such Rights Certificate or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary; and
(e) this Agreement may be supplemented or amended from
time to time pursuant to Section 4.4 or the last sentence of the first
paragraph of Section 2.4(a) hereof.
II.12 Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. Subject to the terms and conditions of this Agreement, if after
the Separation Time, directly or indirectly, (a) the Company shall consolidate
with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving
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corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any Person (including the Company) or cash or any other property,
or (c) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating fifty percent (50%) or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
Person other than the Company or one or more of its wholly owned Subsidiaries,
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof at any time prior to the
Expiration Time and payment of the then current Exercise Price, in accordance
with the terms of this Agreement, such number of validly authorized and issued,
fully paid and nonassessable shares of common stock of such Person or of that
Affiliate or Associate of such Person which has the greatest aggregate market
value, determined in the same manner as the Market Price per share of Common
Stock is determined pursuant to Section 1.1(m) hereof, of outstanding shares of
publicly traded common stock (other than common stock held by its Affiliates,
officers, directors or employee benefit plans, or Associates of the foregoing)
as shall be equal to the result obtained by dividing the then current Exercise
Price by fifty percent (50%) of the Market Price per share of Common Stock on
the date of consummation of such consolidation, merger, sale or transfer of a
share of the common stock that the holder of a Right shall have the right to
receive; (ii) the issuer of such common stock shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its common stock) in connection with such
consummation as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of common stock thereafter deliverable upon the exercise of the Rights.
The Company shall not enter into any transaction of the kind referred to in this
Section 2.12 if at the time of such transaction there are any rights,
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warrants, instruments or securities outstanding or any agreements or
arrangements that, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The Company shall not consummate any such consolidation, merger, sale
or transfer unless such issuer shall have a sufficient number of authorized
shares of its common stock that have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section
2.12 and unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in this Section 2.12 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets
mentioned in this Section 2.12, such issuer will (i) prepare and file a
registration statement under the Securities Act with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Time; and (ii) will deliver to holders of
the Rights historical financial statements for such issuer and each of its
Affiliates that comply in all respects with the requirements for registration
on Form 10 under the Exchange Act. The provisions of this Section 2.12 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.
II.13 Certificate of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 2.4 and 2.12
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with the transfer agent for the Series X
Preferred Stock, and the transfer agent for the Common Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Separation Time, to each holder of a
certificate representing shares of Common Stock) in accordance with Section
4.10 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or to give such
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notice shall not affect the validity or the force and effect of such
adjustment. Any adjustment to be made pursuant to Sections 2.4 and 2.12 hereof
shall be effective as of the date of the event giving rise to such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed to have
knowledge of any adjustment unless and until it shall have received such
certificate.
III - THE RIGHTS AGENT
III.1 General.
(a) The Company hereby appoints the Rights Agent to act
as agent for the Company in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense incurred
without 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 acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
certificate for Series X Preferred Stock, Rights Certificate, certificate for
or other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 3.3 hereof.
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III.2 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
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any corporation succeeding
to the stockholder services business of the Rights Agent or any successor
Rights Agent, will be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 3.4
hereof. In case at the time such successor Rights Agent succeeds to the agency
created by this Agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights 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 Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
III.3 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 Rights Certificates,
by their acceptance thereof, shall be bound:
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(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
will 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 deems it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Chief Financial Officer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for any action taken
or omitted by it in good faith under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the certificates for Series X Preferred Stock or the Rights Certificates
(except its countersignature thereof) and will not be required to verify any of
the foregoing, and all such statements and recitals are and will be deemed to
have been made by the Company only.
(e) The Rights Agent will not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due authorization, execution and delivery
hereof by the Rights Agent) or in respect of the validity or execution of any
certificate for Series X Preferred Stock or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
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Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 2.3(g) hereof) or any adjustment required under the provisions of
Section 2.4 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.4 describing any such adjustment);
nor will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Series X
Preferred Stock to be issued pursuant to this Agreement or any Rights or as to
whether any shares of Series X Preferred Stock will, when issued, be duly and
validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from any person believed by the Rights Agent to be the Chairman of the Board,
the President or any Vice President or the Chief Financial Officer or the
Secretary, any Assistant Secretary of the Company or any other person
designated in writing by such persons, and to apply to such persons for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or omitted by it in good faith in accordance with instructions
of any such person. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent with
respect to its duties or obligations under this Agreement and the date on
and/or after which such action shall be taken or omitted and the Rights Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified
therein (which date shall not be less than ten
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business days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Series X
Preferred Stock, 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
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(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 will not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
III.4 Change of Rights Agent. The Rights Agent may resign and
be discharged from its duties under this Agreement upon 90 days' prior notice
(or such lesser notice as is acceptable to the Company) in writing mailed to
the Company and to each transfer agent of the Series X Preferred Stock, if any,
and the Common Stock, by registered or certified mail, and at the expense of
the Company to the holders of the Rights in accordance with Section 4.10. The
Company may remove the Rights Agent upon 30 days' prior notice in writing,
mailed to the Rights Agent and to each transfer agent of the Series X Preferred
Stock and the Common Stock if any, by registered or certified mail, and to the
holders of the Rights in accordance with Section 4.10. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the
Company will appoint a successor to the Rights Agent. If the Company fails to
make such appointment within a period of 30 days after such removal or
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after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of any Rights (which
holder shall, with such notice, submit such holder's Rights Certificate for
inspection by the Company), then the holder of any Rights may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United States or the State of New York, in good standing, having its principal
office in the State of Massachusetts or New York, that is authorized under such
laws to exercise the powers of the Rights Agent contemplated by this Agreement
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. After appointment, the successor Rights Agent
will 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 will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Series X Preferred Stock, if any, and the Common Stock, and mail a
notice thereof in writing to the holders of the Rights in accordance with
Section 4.10. Failure to give any notice provided for in this Section 3.4,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
IV - MISCELLANEOUS
IV.1 Redemption, Termination and Exchange.
(a) The Board of Directors of the
Company may, at its option, at any time prior to the earlier of the Separation
Time or the Expiration Time redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or
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similar transaction occurring after the date hereof (the "Redemption Price").
The Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the Market Price at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent, and without any further
action and without any notice, the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights.
Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives such notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.
(c) (i) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 2.3(g) and
the second paragraph of Section 2.3(h) hereof) for shares of Common Stock at an
exchange ratio which equals the quotient obtained by dividing the Exercise
Price by the Market Price per share of Common Stock per Right, appropriately
adjusted pursuant to Section 2.4 hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Stock then outstanding.
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(ii) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (c)(i) of
this Section 4.1 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 2.3(g) and the second
paragraph of Section 2.3(h) hereof) held by each holder of Rights.
(iii) In the event that there shall not be sufficient Common
Stock authorized but unissued to permit any exchange of Rights as contemplated
in accordance with this Section 4.1(c), the Company shall take all such action
as may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Stock, the Company shall substitute, for each share of Common
Stock that would otherwise be issuable upon exchange of a Right, a number of
shares of Series X Preferred Stock or fraction thereof having a current market
price per share equal to the Market Price per share of one share of Common
Stock as of the date of issuance of such shares of Series X Preferred Stock or
fraction thereof.
(iv) The Company shall not be required to issue fractions of a
share of Common Stock or to distribute certificates which evidence fractional
shares of Common
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Stock. In lieu of such fractional shares, there shall be paid to the
registered holders of the Rights with regard to which such fractional shares of
Common Stock would otherwise be issuable, either (i) evidence of such
fractional shares by depository receipts, in accordance with the terms of
Section 4.5 hereof or (ii) an amount in cash equal to the same fraction of the
Market Price of a whole share of Common Stock based upon the date of exchange
pursuant to this Section 4.1(c), subject to the terms of Section 4.6 hereof.
IV.2 Provision in Event of Insufficient Shares of Series
X Preferred Stock. If there shall not be sufficient authorized but unissued
shares or reserved shares of Series X Preferred Stock of the Company to permit
the exercise in full of the Rights in accordance with the terms hereof, the
Company, with respect to each Right being exercised and to the extent
necessary, may make adequate provision to substitute for the delivery of Units
or shares or fractions of shares of Series X Preferred Stock (i) cash, (ii)
Common Stock, or other preferred stock or equity securities of the Company,
(iii) debt securities of the Company, (iv) other assets or (v) any combination
of the foregoing, having an aggregate value equal to the Market Price of the
Units of Series X Preferred Stock that would have been purchasable upon
exercise of such Right in the absence of this Section 4.2, or may reduce the
Exercise Price.
IV.3 Issuance of New Rights Certificates. I
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the number or kind or class of shares of
stock purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
IV.4 Supplements and Amendments. Prior to the
Separation Time, the Company and the Rights Agent, upon receipt of the
certificate described hereinbelow, shall, if the Company so directs, supplement
or amend any provision of this Agreement in any respect without the approval of
any holders of Rights. From and after the Separation Time, the Company and
Rights Agent, upon receipt of the certificate described hereinbelow, shall, if
the Company so directs, supplement or amend this Agreement without the approval
of
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any holders of Rights (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein that may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder, other than the time period during which the Rights may be exercised,
or (iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and which shall not materially and
adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon
delivery of a certificate from an appropriate officer of the Company stating
that the proposed supplement or amendment is in compliance with the terms of
this Section 4.4, the Rights Agent shall execute such supplement or amendment.
Prior to the Separation Time, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
IV.5 Fractional Shares. If the Company elects not to
issue certificates representing fractional shares of Series X Preferred Stock
or other securities (pursuant to Section 4.2 hereof) upon exercise of Rights,
the Company may, in lieu thereof, either (i) evidence such fractional shares by
depositary receipts issued pursuant to an appropriate agreement between the
Company and a depositary selected by it, provided that such agreement shall
provide that the holders of the depositary receipts shall have all of the
rights, privileges and preferences to which they are entitled as Beneficial
Owners of such stock, or (ii) subject to Section 4.6 hereof, pay an amount in
cash equal to the same fraction of the Market Price of a Unit of Series X
Preferred Stock.
IV.6 Transactions After the Separation Time. After the
Separation Time and prior to the Expiration Time, the Company shall not engage
in any transaction not in the ordinary course of business that would eliminate
or otherwise diminish in any material respect the benefits intended to be
afforded by this Agreement to the holders of Rights (other than Acquiring
Persons or Affiliates or Associates thereof, or Persons who may become any of
the foregoing). Without limiting the foregoing, after the Separation Time and
prior to the Expiration Time, the Company shall not (i) sell or issue to an
Acquiring Person or any Affiliate or Associate thereof, any rights, options,
warrants or convertible
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securities on terms similar to, or that materially adversely affect the value
of, the Rights, or (ii) sell or issue to an Acquiring Person or any Affiliate
or Associate thereof, Series X Preferred Stock, Common Stock or shares of any
other class of capital stock if such sale or issue is intended to or would
materially adversely affect the value of the Rights.
IV.7 Rights of Action. Subject to the terms of this
Agreement, rights of action in respect of this Agreement, other than rights of
action vested solely in the Rights Agent, are vested in the respective holders
of the Rights (other than Acquiring Persons or Affiliates or Associates
thereof); and any holder of any Rights (other than Acquiring Persons or
Affiliates or Associates thereof), without the consent of the Rights Agent or
of the holder of any other Rights, may, on such holder's own behalf and for
such holder's own benefit and the benefit of other holders of Rights, enforce,
and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, such holder's right to
exercise such holder's Rights in the manner provided in such holder's Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and 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.
IV.8 Holder of Rights Not Deemed a Stockholder. No
holder, as such, of any Right shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of Series X Preferred Stock or any other
securities that may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights, 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 4.9
hereof), or to receive dividends or subscription rights, or otherwise,
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until such Rights shall have been exercised in accordance with the provisions
hereof.
IV.9 Notice of Proposed Actions. If the Company shall
propose after the Separation Time and prior to the Expiration Time to effect a
liquidation, a consolidation or merger with or a sale of all or substantially
all of its assets to any other Person or a reclassification of the Series X
Preferred Stock, then, in each such case, the Company shall give to each holder
of a Right, in accordance with Section 4.10 hereof, a notice of such proposed
action, which shall specify the date on which such action is to take place, and
such notice shall be so given at least 20 Business Days prior to the date of
the taking of such proposed action.
IV.10 Notices. Notices or demands authorized or required
by this Agreement to be given or made by the Rights Agent or by the holder of
any Rights to or on the Company shall be sufficiently given or made if
delivered or sent by first class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
CORAM HEALTHCARE CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
BANKBOSTON, N.A.
c/o BOSTON EQUISERVE L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Shareholder Service
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Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the Rights Register or, prior to the Separation Time, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice.
IV.11 Costs of Enforcement. The Company agrees that if
the Company or any other Person the securities of which are purchasable upon
exercise of Rights fails to fulfill any of its obligations pursuant to this
Agreement, then the Company or such Person will reimburse the holder of any
Rights for the costs and expenses (including legal fees) incurred by such
holder in actions to enforce such holder's rights pursuant to any Rights or
this Agreement.
IV.12 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.
IV.13 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 holders of the Rights any legal or equitable right, remedy
or claim under this Agreement, and this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of the
Rights.
IV.14 Descriptive Headings. Descriptive headings appear
herein for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof.
IV.15 Governing Law. This Agreement and each Right
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 without regard to the laws of such
state as to choice or conflict of laws.
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IV.16 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, but all such counterparts shall together
constitute one and the same instrument.
IV.17 Severability. If any term or provision hereof or
the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such terms or provision to
circumstances other than those as to which it is held invalid or unenforceable.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested as of the date first above set forth.
CORAM HEALTHCARE CORPORATION
By
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief
Executive Officer
Attest:
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
BANKBOSTON, N.A.
By
------------------------
Name:
-------------------
Title:
------------------
Attest:
-------------------------
Title:
-------------------
Signature page of the Stock-holder
Rights Agreement, dated as of June
25, 1997, between CORAM HEALTHCARE
CORPORATION and BANKBOSTON, N.A., as
Rights Agent
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EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES X PARTICIPATING PREFERRED STOCK
of
CORAM HEALTHCARE CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary, of CORAM HEALTHCARE CORPORATION, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with provisions of Section 103 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said Corporation, the said
Board of Directors on June 25, 1997, adopted the following resolution creating
a series of 1,000,000 shares of Preferred Stock designated as Series X
Participating Preferred Stock:
RESOLVED, that a series of the Corporation's Preferred Stock
consisting of 1,000,000 shares of Preferred Stock, be and hereby
is, designated as "Series X Participating Preferred Stock", par
value $.001 per share (the "Series X Preferred"), and that the
Series X Preferred shall have the designations, powers,
preferences, rights and qualifications, limitations and
restrictions set forth in the Certificate of Designation,
Preferences and Rights of Series X Participating Preferred Stock
(the "Certificate") attached as Exhibit A.
This Certificate states that the Board of Directors does hereby
fix and herein state and express such designations, powers, preferences and
relative and other
44
special rights and qualifications, limitations and restrictions thereof as
follows (all terms used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein).
Please note that the automatic Section 1. Designation and Amount. The
shares of such series shall be designated as "Series X Participating Preferred
Stock" (the "Series X Preferred Stock") and the number of shares constituting
such series shall be 1,000,000. Such number of shares of Series X Preferred
Stock may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
X Preferred Stock to a number less than the number of shares of Series X
Preferred Stock then outstanding plus the number of shares of Series X
Preferred Stock reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible or exercisable into Series X Preferred Stock.
(c) Dividends and Distributions.
(a) Subject to the prior and superior rights of the
holders of any shares of any series of preferred stock ranking prior and
superior to the shares of Series X Preferred Stock with respect to dividends,
the holders of shares of Series X 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, dividends payable in cash in an amount per share
(rounded to the nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 100 (the "Dividend Factor") times the aggregate
per share amount of all cash dividends, and the Dividend Factor times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions (other than a dividend payable in shares of the Common Stock, par
value $.001 per share, of the Corporation (the "Common Stock") or a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise)),
declared on the Common Stock since the first issuance of any share or fraction
of a share of Series X Preferred Stock. In the event the Corporation shall at
any time after June 25, 1997 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
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subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Dividend
Factor in the immediately preceding sentence shall be adjusted by multiplying
the Dividend Factor 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 X Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series X Preferred Stock from the date of declaration
of dividends on the Common Stock (other than a dividend payable in shares of
Common Stock). Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series X Preferred Stock in an amount less than
the total amount of such accrued dividends 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 X Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
(b) Voting Rights. The holders of shares of Series X
Preferred Stock shall have the following voting rights:
(e) Subject to the provision for adjustment hereinafter
set forth, each share of Series X Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each
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case the number of votes per share to which holders of shares of Series X
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 X Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) Except as otherwise provided herein or provided by
law, the holders of shares of Series X Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
(c) Certain Restrictions.
(a) Whenever dividends or distributions payable on the
Series X Preferred Stock as provided in Section 2 are in arrears, thereafter
and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series X Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
i) declare or pay dividends on, make any other
distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series X 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 X Preferred Stock, except dividends paid or
distributions made ratably on the Series X Preferred Stock and
all such stock ranking on a parity with respect to the particular
dividend or
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distribution in proportion to the total amounts to which the
holders of all such shares are then entitled;
iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series X Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series X Preferred
Stock; or
iv) purchase or otherwise acquire for consideration any
shares of Series X 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 X Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
(f) Reacquired Shares. Any shares of Series X Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as
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48
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(g) Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series X Preferred Stock unless,
prior thereto, the holders of shares of Series X Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series X Liquidation Preference"). Following the payment of the full
amount of the Series X Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series X Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Stock Liquidation Amount") equal to the quotient
obtained by dividing (i) the Series X Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series X Liquidation Preference
and the Common Stock Liquidation Amount in respect of all outstanding shares of
Series X Preferred Stock and Common Stock, respectively, holders of Series X
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of remaining assets to be distributed in the
ratio of the Adjustment Number to one (1) with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not
sufficient assets available to permit payment in full of the Series X
Liquidation Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series X Preferred
Stock, then such remaining assets shall be distributed ratably to the holders
of the Series X Preferred Stock and the holders
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49
of such parity shares in proportion to their respective liquidation
preferences.
(c) In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of shares,
(iv) reclassify the Common Stock or (v) effect a recapitalization of the Common
Stock, then in each such case the Adjustment Number in effect immediately prior
to such event shall be adjusted by multiplying such Adjustment 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.
(h) Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series X Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series X 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.
(i) No Redemption. The shares of Series X Preferred Stock
shall not be redeemable.
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50
(j) Ranking. The Series X Preferred Stock shall rank junior
to all other series of the Corporation's preferred stock, if any, as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise. Nothing in this Certificate shall limit
the power of the Board of Directors to create a new series of preferred stock
ranking senior to the Series X Preferred Stock in any respect.
(k) Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series X
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of two-thirds or more of the outstanding shares of Series X
Preferred Stock, voting separately as a class.
(l) Fractional Shares. Series X Preferred Stock may be
issued in fractions of a share, which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series X Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this _____ day of ______, 1997.
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Assistant Secretary
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EXHIBIT B
SUMMARY OF STOCKHOLDER RIGHTS AGREEMENT
On June 25, 1997, the Board of Directors of CORAM HEALTHCARE
CORPORATION (the "Company") declared a dividend distribution of one right (a
"Right") to purchase a certain number of units (determined by a formula
described herein) for each outstanding share of common stock, par value $.001
per share (the "Common Shares"), of the Company at a price of $10, subject to
adjustment (the "Exercise Price"). Each unit is equal to one one-hundredth of
a share of a newly authorized Series X Participating Preferred Stock, par value
$.001 per share ("Series X Preferred Shares") of the Company. The distribution
will be payable on July 9, 1997 (the "Record Date") to the stockholders of
record on that date. The description and terms of the Rights are set forth in
the Stockholder Rights Agreement (the "Agreement") between the Company and
BANKBOSTON, N.A., as rights agent (the "Rights Agent").
This summary is qualified entirely by reference to the Agreement,
copies of which are available from the Secretary of the Company.
The following is a general description only and is subject to the
detailed terms and conditions of the Agreement.
o Common Share Certificates Evidencing Rights
Until the Separation Time (as defined below), the Rights are not
exercisable. Certificates for the Rights will not be sent to
shareholders; the Rights are deemed to attach to and trade together with
the Common Shares. Common Shares issued after the Record Date and prior
to the Separation Time will be issued with accompanying Rights.
Accordingly, the Common Share certificates outstanding on the Record
Date will represent the Rights related thereto, and Common Share
certificates issued after the Record Date (upon the transfer of shares
or the issuance of new shares) will also contain a notation
incorporating the Agreement by reference.
52
o Separation Time
Subject to certain exceptions described in the Agreement, unless
earlier redeemed by the Company, the Rights will separate from the
Common Shares, separate certificates evidencing the Rights (the "Rights
Certificates") will be issued and the Rights will become exercisable 10
business days (the "Separation Time") following the date on which a
person (including its affiliates and associates) (i) acquires, (ii)
obtains the right to acquire or (iii) announces or commences a tender or
exchange offer to acquire Beneficial Ownership of 15% or more of the
outstanding Common Shares (such person thereby becoming an "Acquiring
Person"). (1)
o Issuance of Rights Certificates; Expiration of Rights
As soon as practicable following the Separation Time, the Rights
Certificates will be mailed to holders of record of the Common Shares as
of the Separation Time and such separate Rights Certificates alone will
evidence the Rights from and after the Separation Time. The Rights will
expire on the first anniversary of the adoption of the Agreement;
provided that, the Board may otherwise act to extend the expiration for
annual terms up to the tenth anniversary of the adoption of the
Agreement (the "Expiration Date").
o Exercise of the Rights
Following the Separation Time, holders of the Rights (the "Rights
Holders") (other than Rights beneficially owned by the Acquiring Person
or its affiliates or associates, which will thereafter be void) will be
entitled to receive upon exercise and
-----------------------
(1) Pursuant to the terms of the Agreement, certain types of institutional
investors, as well as designated minority and bridge note investors, will not
become an Acquiring Person unless it (i) acquires, (ii) obtains the right to
acquire or (iii) announces or commences a tender or exchange offer to acquire
Beneficial Ownership of in excess of up to 25% of the outstanding Common
Shares.
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53
payment of the Exercise Price that number of units of Series X Preferred
Shares which equals the result obtained by dividing the Exercise Price
by 50% of the average market price per Common Share over the 20 trading
days immediately preceding the date of such exercise (the "Market
Price") (as defined in the Agreement). Assuming for purposes of
illustration an unadjusted Exercise Price of $10 per Right and a Common
Share Market Price of $2.50, a payment by a Rights Holder of $10 would
entitle him to 8 units or .08 Series X Preferred Shares. The Rights
Holder would receive 8 Series X Preferred Shares for each 100 Common
Shares held by him. The rights, preferences, privileges and
restrictions with respect to the Series X Preferred Shares are set forth
in a Certificate of Designation, Rights and Preferences filed with the
office of the Delaware Secretary of State.
o Right to Buy Acquiring Company Shares at Half Price
If, after the Separation Time, unless the Rights are earlier
redeemed or amended, (i) the Company were to be acquired in a merger or
other business combination transaction in which the Company was not the
surviving corporation or in which the Company's outstanding Common
Shares were changed or exchanged for cash, stock or assets of another
person or (ii) 50% or more of the Company's consolidated assets or
earning power were to be sold (other than in transactions in the
ordinary course of business), then proper provision would be made so
that each Rights Holder who has not theretofore exercised his Rights
(other than Rights beneficially owned by the Acquiring Person or its
affiliates or associates, which will thereafter be void) will thereafter
have the right to receive, upon exercise, a number of shares of common
stock of the acquiring company having a value equal to two times the
Exercise Price.
Each Series X Preferred Share for which Rights had been exercised
prior to a business combination or other transaction of the type
referred to in clause (i) in the immediately preceding paragraph would
be entitled to receive upon consummation thereof 100 times the
consideration (cash, securities or other property, or a
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54
combination thereof) that one Common Share would receive. Assuming
again the illustrative facts set forth under Exercise of the Rights
above, and assuming also that each Common Share was exchanged for $5 in
cash and a debenture having a face amount of $2, the holder of 100
Common Shares and 8 Series X Preferred Shares would be entitled to
receive $4,500 in cash and $1,800 face amount of debentures. Without
the Series X Preferred Shares, such holder would have only been entitled
to receive $500 in cash and $200 face amount of debentures.
o Redemption
Any time on or prior to the earlier of (i) the Separation Time or
(ii) the Expiration Date of the Rights, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). Immediately upon the action of the Board of
Directors authorizing redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the Rights Holders will
be to receive the Redemption Price.
o Amendment of Agreement
The provisions of the Agreement may be supplemented or amended by
the Board of Directors, without approval of Rights Holders, in any
manner whatsoever prior to the Separation Time. Any amendment adopted
by the Board of Directors after the Separation Time may not materially
and adversely affect the interests of the holders of the Rights
Certificates.
o Exchange for Common Shares
At any time following the Separation Time but before the
Expiration Date, the Company may, at its option, exchange all or any
portion of the Rights (except those Rights which are void) for Common
Shares (or for units of Series X Preferred Shares) at an exchange ratio
which equals the Exchange Price divided by the Market Price per Common
Share per Right. The Company, however, may not effect such an exchange
if an
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55
Acquiring Person becomes the owner of 50% or more of the then
outstanding Common Shares.
o Adjustments to Prevent Dilution
Each of the Exercise Price payable, the number of Rights issued
per Common Share and the number of Series X Preferred Shares or other
securities or property issuable upon exercise of the Rights is subject
to adjustment from time to time to prevent dilution, as set forth in the
Agreement.
o Fractional Shares
The Company may elect not to issue fractional Series X Preferred
Shares, Common Shares or other securities of the Company upon exercise
or exchange of the Rights and in lieu thereof may evidence such
fractional shares by depositary receipts or may make an adjustment in
cash based on the value of the Series X Preferred Shares, Common Shares
or other securities of the Company. The holders of any such depositary
receipts will have all the rights, preferences and privileges to which
they are entitled as holders of Series X Preferred Shares.
o No Stock Rights Prior to Exercise
Until a Right is exercised, the Rights Holder, as such, will have
no rights as a shareholder of the Company (other than rights resulting
from such Rights Holder's ownership of Common Shares), including,
without limitation, the right to vote or to receive dividends.
o Federal Securities Law Registration
The sale of Series X Preferred Shares pursuant to the Rights will
be subject to the effectiveness of a registration statement under the
Securities Act of 1933 and a Registration Statement on Form 8-A under
the Securities Exchange Act of 1934. A copy of the Agreement will be
filed with the Securities and Exchange Commission as an exhibit to such
registration statements and as an exhibit to the Company's Current
Report on Form 8-K relating to the Agreement. Rights Holders will be
able to obtain a copy of the Agreement free of charge from the Company.
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EXHIBIT C
FORM OF RIGHTS CERTIFICATE
Certificate No. R- __________ Rights
Rights Certificate
CORAM HEALTHCARE CORPORATION
NOT EXERCISABLE AFTER JUNE 25, 1998, SUCH LATER DATE TO WHICH THE COMPANY'S
BOARD OF DIRECTORS MAY EXTEND SUCH DATE (BUT IN NO EVENT AFTER JUNE 25, 2007),
OR IN EITHER CASE EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE STOCKHOLDER RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
STOCKHOLDER RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. IF THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE STOCKHOLDER RIGHTS AGREEMENT), THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID AS SPECIFIED IN SECTION 2.3(g) OF
SUCH AGREEMENT.
This certifies that ________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Stockholder Rights Agreement, dated as of June 25, 1997 (the
"Stockholder Rights Agreement"), between CORAM HEALTHCARE CORPORATION, a
Delaware corporation (the "Company"), and BANKBOSTON, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the Separation Time, as
such term is defined in the Stockholder Rights Agreement, and prior to the
close of business on June 25, 2007, at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, at a
purchase price of $10 per share (the "Exercise Price"), that number of one one-
hundredths of a share (each
57
one one-hundredth of a share being referred to hereinafter as a "Unit") of the
Company's Series X Participating Preferred Stock, par value of $.001 per share
(the "Series X Preferred Stock"), which equals the quotient obtained by
dividing the Exercise Price by 50% of the Market Price (as defined in the
Stockholder Rights Agreement) per share of the Company's Common Stock, $.001
par value per share (the "Common Stock"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. If, after the Separation Time, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation or in which the Company's outstanding
Common Stock is changed or exchanged for stock or assets of another person or
(ii) 50% or more of the Company's consolidated assets or earning power is sold,
then proper provision must be made so that each holder of a Right which has not
theretofore been exercised (except as otherwise provided in the Stockholder
Rights Agreement) will thereafter have the right to receive, upon exercise,
shares of common stock of the acquiring company having a value equal to two
times the Exercise Price. The Exercise Price shall be paid, at the election of
the holder, in cash, by certified check or money order payable to the order of
the Company, Common Stock, Rights to purchase Units of the Company's Series X
Preferred Stock, or, in the sole discretion of the Board of Directors of the
Company, in such other form as may be determined by the Board of Directors of
the Company, in each case in an amount equal to the aggregate Exercise Price of
such Rights. The number of Rights evidenced by this Rights Certificate (and
the number of shares that may be purchased upon exercise thereof) set forth
above, and the Exercise Price per share set forth above, are the number and
Exercise Price as of ________, ____.
At the Separation Time (as such term is defined in the
Stockholder Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Stockholder Rights Agreement) or (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, such Rights cannot validly be transferred or
exercised and are for all purposes void.
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58
As provided in the Stockholder Rights Agreement, the Exercise
Price is subject to adjustment upon the occurrence of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Stockholder Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and made
a part hereof and to which Stockholder 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 Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Stockholder Rights Agreement. Copies of the
Stockholder Rights Agreement are on file at the office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Series X
Preferred Stock (or such other securities) as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Stockholder Rights Agreement,
the Rights evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right at any time prior to the earlier
of the Separation Time or the Expiration Time.
If the Company does not have a sufficient number of shares of
Series X Preferred Stock to permit the exercise in full of the Rights, the
Company may issue, in lieu of Units of Series X Preferred Stock, cash, Common
Stock or
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59
other preferred stock or equity securities, debt securities, other assets, or
any combination of the foregoing, or may reduce the Exercise Price.
The Company is not obligated to issue fractional shares of Series
X Preferred Stock (or such other securities of the Company) upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof may issue
depository receipts, as provided in the Stockholder Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of shares
of Series X Preferred Stock or of any other securities of the Company that may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Stockholder 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 Stockholder Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Stockholder Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _______________, ____
ATTEST: CORAM HEALTHCARE CORPORATION
By
------------------------- ----------------------------
Name: Name:
-------------------- -------------------------
Secretary Title:
------------------------
Countersigned:
BANKBOSTON, N.A.
By
-------------------------
Name:
--------------------
An Authorized Officer
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, _______________________________________ hereby sells,
assigns and transfers unto _____________________________________ (Please print
name and address of transferee) ________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ____________________ Attorney-in-Fact,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ,
--------------- --------
-----------------------------
Signature
Signature Guaranteed:
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61
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Stockholder Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: -----------,------ ------------------------
Signature
Signature Guaranteed:
------- ------- ------- ------- ------- ------- -------
NOTICE
The signature to the foregoing assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: CORAM HEALTHCARE CORPORATION
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the shares of Series
X 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 shares 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 Rights Certificate, a new Rights 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: ,
-------------- -------
----------------------------
Signature
Signature Guaranteed:
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63
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights 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 pursuant to the Stockholder Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , ------------------------
----------- ------ Signature
Signature Guaranteed:
------- ------- ------- ------- ------- ------- -------
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alternation or enlargement or any change
whatsoever.
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