Exhibit 4
First Health Group Corp.
and
Illinois Stock Transfer Company
and
LaSalle National Bank,
as Rights Agent
Rights Agreement
Dated as of March 19, 1999
RIGHTS AGREEMENT
Rights Agreement, dated as of March 19, 1999, between First
Health Group Corp., a Delaware corporation (the "Company"), Illinois
Stock Transfer Company, an Illinois corporation, and LaSalle National
Bank, an Illinois banking institution, serving collectively as the Rights
Agent (the "Rights Agent").
RECITALS
WHEREAS, on March 19, 1999, the Board of Directors of the
Company adopted this Agreement, and has authorized and declared a
dividend of one right (a "Right") for each Common Share (as defined in
Section 1.6) of the Company outstanding at the close of business on April
5, 1999 (the "Record Date"), and has authorized and directed the issuance
of one Right (subject to adjustment as provided herein) with respect to
each Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date and the Expiration Date (as
such terms are defined in Sections 3.1 and 7.1), each Right initially
representing the right to purchase one-half of one Common Share of the
Company, upon the terms and subject to the conditions hereinafter set
forth; provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the Distribution Date
and prior to the Expiration Date in accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall
be the Beneficial Owner (as such term is hereinafter defined) of 15% or
more of the Common Shares of the Company then outstanding but shall not
include an Exempt Person (as such term is hereinafter defined).
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15%
or more of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding solely by
reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of one or more
additional Common Shares of the Company (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding
Common Shares in Common Shares or pursuant to a split or subdivision of
the outstanding Common Shares), then such Person shall be deemed to be an
"Acquiring Person" unless, upon becoming the Beneficial Owner of such
additional Common Shares, such Person does not beneficially own 15% or
more of the Common Shares then outstanding. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this Section 1.1, has
become such inadvertently (including, without limitation, because: (A)
such Person was unaware that it beneficially owned a percentage of Common
Shares that would otherwise cause such Person to be an "Acquiring
Person," or (B) such Person was aware of the extent of its Beneficial
Ownership but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and without any intention of
changing or influencing control of the Company, and such Person divests
as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an Acquiring Person, as defined pursuant
to the foregoing provisions of this Section 1.1, then such Person shall
not be deemed to be or have become an "Acquiring Person" at any time for
any purposes of this Agreement. For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular percentage of
such outstanding Common Shares of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date of this Agreement.
1.2 "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Agreement.
1.3 A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on
the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with
regulatory requirements, fulfillment of a condition or
otherwise) pursuant to any agreement, arrangement or
understanding, whether or not in writing (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities), 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 of, or to beneficially own,
(w) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (x) securities which such
Person has a right to acquire upon the exercise of Rights at
any time prior to the time that any Person becomes an Acquiring
Person, (y) securities issuable upon the exercise of Rights
from and after the time that any Person becomes an Acquiring
Person if such Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3.1 or Section 22
("Original Rights") or pursuant to Section 11.9 or Section
11.15 with respect to an adjustment to Original Rights, or (z)
securities which such Person or any of such Person's Affiliates
or Associates may acquire, does or do acquire or may be deemed
to acquire or may be deemed to have the right to acquire,
pursuant to any merger or other acquisition agreement between
the Company and such Person (or one or more of such Person's
Affiliates or Associates) if prior to such Person becoming an
Acquiring Person the Board of Directors of the Company has
approved such agreement and determined that such Person shall
not be or be deemed to be the beneficial owner of such
securities within the meaning of this Section 1.3; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security under this clause (B) if the
agreement, arrangement or understanding to vote such security:
(1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act, and (2)
is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) and with respect to which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities), whether
or not in writing, for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in
the proviso to Section 1.3(ii)(B)) or disposing of any
securities of the Company;
provided, however, that no Person who is an officer, director or employee
of an Exempt Person shall be deemed, solely by reason of such Person's
status or authority as such, to be the Beneficial Owner of, to have
beneficial ownership of or to beneficially own any securities that are
beneficially owned, including, without limitation, in a fiduciary
capacity, by an Exempt Person or by any other such officer, director or
employee of an Exempt Person.
1.4 "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
1.5 "close of business" on any given date shall mean 5:00
p.m., New York time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 p.m., New York time, on the next
succeeding Business Day.
1.6 "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.01 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock with the greatest voting
power, or the equity securities or other equity interest having power to
control or direct the management, of such other Person or, if such Person
is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person, and which has issued and outstanding
such capital stock, equity securities or equity interest.
1.7 "Exempt Person" shall mean the Company, any Subsidiary of
the Company, in each case including, without limitation, its fiduciary
capacity, or any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity or trustee holding shares of
capital stock of the Company for or pursuant to the terms of any such
plan, or for the purpose of funding other employee benefits for employees
of the Company or any Subsidiary of the Company.
1.8 "Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, unincorporated
association, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
1.9 "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, the filing of a report pursuant to
Section 13(d) of the Exchange Act or pursuant to a comparable successor
statute) by the Company or an Acquiring Person that an Acquiring Person
has become such or that discloses information which reveals the existence
of an Acquiring Person or such earlier date as a majority of the Board of
Directors shall become aware of the existence of an Acquiring Person.
1.10 "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, of record or beneficially,
directly or indirectly, by such Person.
1.11 A "Trigger Event" shall be deemed to have occurred upon
any Person becoming an Acquiring Person.
1.12 The following terms shall have the meanings defined for
such terms in the Sections set forth below:
Term Section
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
Exchange Act 1.1
Exchange Consideration 27
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders
of the Rights (who, in accordance with Section 3, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-
Rights Agents as it may deem necessary or desirable. In the event the
Company appoints one or more co-Rights Agents, the respective duties of
the Rights Agent and any co-Rights Agent shall be as the Company shall
determine. Contemporaneously with such appointment, if any, the Company
shall notify the Rights Agent thereof.
Section 3. Issuance of Right Certificates.
3.1 Rights Evidenced by Share Certificates. Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day after the date of the commencement of, or first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer the consummation of which would
result in any Person (other than an Exempt Person) becoming the
Beneficial Owner of Common Shares aggregating 15% or more of the then
outstanding Common Shares of the Company (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights
(unless earlier expired, redeemed or terminated) will be evidenced
(subject to the provisions of Section 3.2) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates
for Common Shares shall also be deemed to be Right Certificates) and not
by separate certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with the
transfer of the underlying Common Shares. The preceding sentence
notwithstanding, prior to the occurrence of a Distribution Date specified
as a result of an event described in clause (ii) (or such later
Distribution Date as the Board of Directors of the Company may select
pursuant to this sentence), the Board of Directors may postpone, one or
more times, the Distribution Date which would occur as a result of an
event described in clause (ii) beyond the date set forth in such clause
(ii). Nothing herein shall permit such a postponement of a Distribution
Date after a Person becomes an Acquiring Person, except as result of the
operation of the third sentence of Section 1.1. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign and the Company (or, if requested, Rights
Agent) will send, by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Distribution
Date (other than any Acquiring Person or any Associate or Affiliate of an
Acquiring Person), at the address of such holder shown on the records of
the Company, one or more certificates for Rights, in substantially the
form of Exhibit A hereto (a "Right Certificate"), evidencing one Right
(subject to adjustment as provided herein) for each Common Share so held.
As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2 Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be sent a copy
of a Summary of Rights to Purchase Common Shares, in substantially the
form attached hereto as Exhibit B (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Record Date at the address of such holder
shown on the records of the Company. With respect to certificates for
Common Shares outstanding as of the close of business on the Record Date,
until the Distribution Date (or the earlier Expiration Date), the Rights
will be evidenced by such certificates for Common Shares registered in
the names of the holders thereof together with a copy of the Summary of
Rights and the registered holders of the Common Shares shall also be
registered holders of the associated Rights. Until the Distribution Date
(or the earlier Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding at the close of business on the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
3.3 New Certificates After Record Date. Certificates for
Common Shares which become outstanding (whether upon issuance out of
authorized but unissued Common Shares, disposition out of treasury or
transfer or exchange of outstanding Common Shares) after the Record Date
but prior to the earliest of the Distribution Date or the Expiration
Date, shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in an Agreement between
First Health Group Corp. (the "Company"), Illinois Stock
Transfer Company and LaSalle National Bank, collectively
serving as Rights Agent, dated as of March 19, 1999, as the
same may be amended from time to time (the "Agreement"), the
terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in
the Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Agreement without charge after
receipt of a written request therefor. As described in the
Agreement, Rights which are owned by, transferred to or have
been owned by an Acquiring Person or Associates or Affiliates
thereof (as defined in the Agreement) shall become null and
void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until
the Distribution Date (or the earlier Expiration Date), the Rights
associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender for transfer
of any such certificates, except as otherwise provided herein, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed
canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.
Notwithstanding this Section 3.3, the omission of a legend
shall not affect the enforceability of any part of this Agreement or the
rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares, certification and
assignment to be printed on the reverse thereof) shall be substantially
the same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or trading system on
which the Rights may from time to time be listed or quoted, or to conform
to usage. Subject to the terms and conditions hereof, the Right
Certificates, whenever issued, shall be dated as of the Record Date, and
shall show the date of countersignature by the Rights Agent, and on their
face shall entitle the holders thereof to purchase such number of Common
Shares as shall be set forth therein at the price per Common Share set
forth therein (the "Purchase Price"), but the number of such Common
Shares and the Purchase Price shall be subject to adjustment as provided
herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman
of the Board of Directors, the Chief Executive Officer, President or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall6
be countersigned, either manually or by facsimile signature, by an
authorized signatory of the Rights Agent, but it shall not be necessary
for the same signatory to countersign all of the Right Certificates
hereunder. No Right Certificate shall be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the Person who signed
such Right Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company by any
Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the
Right Certificates, the certificate number of each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 7.5, Section 11.1.2
and Section 14, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to
Section 11.1.2 or that have been exchanged pursuant to Section 27) may be
transferred, split up or combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Common Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up or combine or exchange
any Right Certificate shall make such request in writing delivered to the
Rights Agent, and shall surrender, together with any required form of
assignment and certificate duly completed, the Right Certificate or Right
Certificates to be transferred, split up or combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate or Right Certificates until the registered holder shall have
completed and signed the certificate contained in the form of assignment
on the reverse side of such Right Certificate or Right Certificates and
shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment from the holders of Right
Certificates of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up or
combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2 , at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
7.1 Exercise of Rights. Subject to Section 11.1.2 and except
as otherwise provided herein, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby in whole or in part
at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and certification on
the reverse side thereof duly executed, to the Rights Agent at the office
of the Rights Agent designated for such purpose, together with payment of
the aggregate Purchase Price for each Common Share (or other securities,
cash or other assets) as to which the Rights are exercised, at or prior
to the time (the "Expiration Date") that is the earliest of: (i) the
close of business on March 19, 2009 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date"), (iii) the closing of any merger or other acquisition
transaction involving the Company pursuant to an agreement of the type
described in Section 13.3, at which time the Rights are deemed
terminated, or (iv) the time at which the Rights are exchanged as
provided in Section 27.
7.2 Purchase. The Purchase Price for each Common Share
pursuant to the exercise of two Rights shall be initially $100.00, shall
be subject to adjustment from time to time as provided in Sections 11, 13
and 26, and shall be payable in lawful money of the United States of
America in accordance with Section 7.3.
7.3 Payment Procedures. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase
and certification duly executed, accompanied by payment of the aggregate
Purchase Price for the Common Shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9, in cash or by certified
or cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly: (i)(A) make requisition from
any transfer agent of the Common Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of Common Shares
to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of Common Shares issuable
upon exercise of the Rights hereunder with a depository agent, make
requisition from the depositary agent depositary receipts representing
interest in such number of Common Shares as are to be purchased (in which
case certificates for the Common Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the depositary agent to comply with all such
requests, (ii) when appropriate, make requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 14 or otherwise in accordance with Section
11.1.3, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may
be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue
other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11.1.3, the Company will make all
arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
7.4 Partial Exercise. In case the registered holder of any
Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
7.5 Full Information Concerning Ownership. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any purported exercise
as set forth in this Section 7 unless the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise shall have been duly completed
and signed by the registered holder thereof and the Company shall have
been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form or, if surrendered to the Rights Agent,
shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Capital Stock. The
Company covenants and agrees that, from and after the Distribution Date,
it will cause to be reserved and kept available out of its authorized and
unissued Common Shares the number of Common Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.
So long as the Common Shares (and, following the occurrence of
a Trigger Event, Common Shares and/or other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange or
traded in the over-the-counter market and quoted on the National
Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") (including the National Market or Small Cap Market), the
Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to
be listed or admitted to trading on such exchange or quoted on Nasdaq
upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares (and,
following the occurrence of a Trigger Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid
and non-assessable.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts to, if then necessary, permit the
issuance of Common Shares upon the exercise of Rights, register and
qualify such Common Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and any applicable state securities or "Blue Sky"
laws (to the extent exemptions therefrom are not available), cause such
registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the date as of which the Rights are no
longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90
days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the
Securities Act (if required) shall have been declared effective.
The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Common Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates for the
Common Shares (or Common Shares and/or other securities, as the case may
be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates for Common Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose
name any certificate for Common Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of
the Common Shares (or Common Shares and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Common Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate
shall be dated, the next succeeding Business Day on which the Common
Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Common Shares or
other securities or property purchasable upon exercise of each Right and
the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
11.1 Post-Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In the
event the Company shall at any time after the date of this Agreement (A)
declare and pay a dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11.1, the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a
time when the Common Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both
Section 11.1.1 and Section 11.1.2, the adjustment provided for in this
Section 11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to Section 11.1.2.
11.1.2 Acquiring Person Events; Triggering Events. Subject to
Sections 23.1 and 27 of this Agreement, in the event that a Trigger Event
occurs, then, from and after the first occurrence of such event, each
holder of a Right, except as provided below, shall thereafter have a
right to receive, upon exercise thereof at a price per Right equal to the
then current Purchase Price multiplied by the number of Common Shares for
which a Right is then exercisable (without giving effect to this Section
11.1.2), in accordance with the terms of this Agreement, such number of
Common Shares as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of Common Shares for which a
Right is then exercisable (without giving effect to this Section 11.1.2)
and (y) dividing that product by 50% of the current per share market
price of the Common Shares (determined pursuant to Section 11.4) on the
first of the date of the occurrence of, or the date of the first public
announcement of a Trigger Event (the "Adjustment Shares"); provided,
that the Purchase Price and the number of Adjustment Shares shall
thereafter be subject to further adjustment as appropriate in accordance
with Section 11.6. Notwithstanding the foregoing, upon the occurrence of
a Trigger Event, any Rights that are or were acquired or beneficially
owned by (1) any Acquiring Person or any Associate or Affiliate thereof,
(2) a transferee of any Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (3) a transferee of any Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person
or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of this Section 11.1.2, and
subsequent transferees, shall become void without any further action, and
any holder (whether or not such holder is an Acquiring Person or an
Associate or Affiliate of an Acquiring Person) of such Rights shall
thereafter have no right to exercise such Rights under any provision of
this Agreement or otherwise. The Company shall not enter into any trans-
action of the type described in this Section 11.1.2 if, at the time of
such transaction, there are any rights, warrants, instruments or securi-
ties outstanding or any arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. From and
after the Trigger Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this paragraph shall be
canceled.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result
of its failure to make any determinations with respect to any Acquiring
Person or its Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in
Section 13.1, any Rights that theretofore have not been exercised
pursuant to this Section 11.1.2 shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11.1.2.
11.1.3 Insufficient Shares. In the event that upon the
occurrence of one or more of the events listed in Section 11.1.2 above
there shall not be sufficient Common Shares authorized but unissued, or
held by the Company as treasury shares, to permit the exercise in full of
the Rights in accordance with the foregoing Section 11.1.2, the Company
shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights, provided,
however, that if the Company determines that it is unable to cause the
authorization of a sufficient number of additional Common Shares, then,
in the event the Rights become exercisable, the Company, with respect to
each Right and to the extent necessary and permitted by applicable law
and any agreements or instruments in effect on the date hereof to which
it is a party, shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), over (2) the result obtained by multiplying the number of Common
Shares in respect of which a Right is then exercisable by the then-
current Purchase Price (such excess, the "Spread") and (B) with respect
to each Right (other than Rights which have become void pursuant to
Section 11.1.2), make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) shares of preferred stock or other
equity securities of the Company (including, without limitation, shares,
or fractions of shares, of preferred stock which, by virtue of having
dividend, voting and liquidation rights substantially comparable to those
of the Common Shares, the Board of Directors of the Company has deemed in
good faith to have substantially the same value as Common Shares) (each
such share of preferred stock or fractions of shares of preferred stock
constituting a "common stock equivalent")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected in
good faith by the Board of Directors of the Company; provided, however,
that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
first occurrence of a Trigger Event, then the Company shall be obligated
to deliver, to the extent necessary and permitted by applicable law and
any agreements or instruments in effect on the date hereof to which it is
a party, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is unlikely that sufficient
additional Common Shares could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may be
extended and re-extended to the extent necessary, but not more than
ninety (90) days following the first occurrence of a Trigger Event, in
order that the Company may seek stockholder approval for the
authorization of such additional shares (such period as may be extended,
the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third
sentences of this Section 11.1.3, the Company: (x) shall provide that
such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section
11.1.3, the value of a Common Share shall be the current per share market
price (as determined pursuant to Section 11.4) on the date of the first
occurrence of a Trigger Event and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Shares
on such date. The Board of Directors of the Company may, but shall not
be required to, establish procedures to allocate the right to receive
Common Shares upon the exercise of the Rights among holders of Rights
pursuant to this Section 11.1.3. Actions of the Company pursuant to this
Section 11.1.3 shall be taken by the vote of a majority of the Board of
Directors (including, following a Trigger Event, a majority of the
Continuing Directors).
11.2 Dilutive Rights Offering. In case the Company shall fix a
record date for the issuance of rights, options or warrants to all
holders of Common Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Common
Shares (or securities convertible into Common Shares or common stock
equivalents) at a price per Common Share (or having a conversion or
exercise price per Common Share, if a security convertible into or
exercisable for Common Shares or common stock equivalents) less than the
current per share market price of the Common Shares (as determined
pursuant to Section 11.4) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Common Shares or
common stock equivalents outstanding on such record date plus the number
of Common Shares or common stock equivalents which the aggregate offering
price of the total number of Common Shares or common stock equivalents to
be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
per share market price and the denominator of which shall be the number
of Common Shares or common stock equivalents outstanding on such record
date plus the number of additional Common Shares or common stock
equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Common Shares and/or common stock
equivalents owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such rights
or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had
not been fixed.
11.3 Distributions. In case the Company shall fix a record
date for the making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash, securities or assets
(other than a regular periodic cash dividend at a rate not in excess of
125% of the rate of the last regular periodic cash dividend theretofore
paid or, in case regular periodic cash dividends have not theretofore
been paid, at a rate not in excess of 50% of the average net income per
share of the Company for the four quarters ended immediately prior to the
payment of such dividend, or a dividend payable in Common Shares (which
dividend, for purposes of this Agreement, shall be subject to the
provisions of Section 11.1.1(A))) or convertible securities, or
subscription rights or warrants (excluding those referred to in Section
11.2), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
current per share market price of the Common Shares (as determined
pursuant to Section 11.4) on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets, securities or evidences
of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Common Share and the denominator of which
shall be such current per share market price of the Common Shares
(determined pursuant to Section 11.4); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
11.4 Current Per Share Market Value.
11.4.1 General. For the purpose of any computation
hereunder, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11.4.1) on any date shall be
deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current per share market price of the Security
is determined during any period following the announcement by the
issuer of such Security of (i) a dividend or distribution on such
Security payable in shares of such Security or securities convertible
into such shares or (ii) any subdivision, combination or reclassification
of such Security, and prior to the expiration of thirty (30) Trading Days
after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then,
and in each such case, the "current per share market price" shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security is not 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 Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by Nasdaq or
such other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Security,
the fair value of the Security on such date as determined in good faith
by the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
If the Security is not publicly held or not so listed or traded, or if
on any such date the Security is not so quoted and no such market maker
is making a market in the Security, "current per share market price"
shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company or, if at the time of such
determination there is an Acquiring Person, by a nationally recognized
investment banking firm selected by the Board of Directors, which shall
have the duty to make such determination in a reasonable and objective
manner, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
11.5 Insignificant Changes. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase
or decrease of at least 1% in the Purchase Price. Any adjustments which
by reason of this Section 11.5 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest ten-thousandth of a Common Share or other share or
security, as the case may be.
11.6 Shares Other Than Common Shares. If, as a result of an
adjustment made pursuant to Section 11.1, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Common Shares contained in Sections 11.1, 11.2 11.3, 11.5, 11.8, 11.9 and
11.13 inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Common Shares shall apply on like terms to any such other
shares.
11.7 Rights Issued Prior to Adjustment. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
11.8 Effect of Adjustments. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each adjustment
of the Purchase Price as a result of the calculations made in Sections
11.2 and 11.3, each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of Common Shares (calculated to the
nearest ten thousandth) obtained by: (i) multiplying (x) the number of
Common Shares covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
11.9 Adjustment in Number of Rights. The Company may elect on
or after the date of any adjustment of the Purchase Price to adjust the
number of Rights, in substitution for any adjustment in the number Common
Shares issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment and, if known at the time, the amount
of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter but, if the Right
Certificates have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11.9, the Company may, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
11.10 Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of Common Shares
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per share and the number of Common Shares which were expressed in
the initial Right Certificates issued hereunder.
11.11 Deferred Issuance. In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective
as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any
Right exercised after such record date of that number of Common Shares
and shares of other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and shares
of other capital stock or other securities, assets or cash of the
Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
11.12 Reduction in Purchase Price. Anything in this Section
11 to the contrary notwithstanding, the Company shall be entitled to make
such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in
its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Shares, issuance wholly for
cash of any of the Common Shares at less than the current market price,
issuance wholly for cash of Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares, stock
dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders
of its Common Shares shall not be taxable to such stockholders.
11.13 Company Not to Diminish Benefits of Rights. The Company
covenants and agrees that after the earlier of the Shares Acquisition
Date or Distribution Date it will not, except as permitted by Section 23,
Section 26 or Section 27, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable
that such action will substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
11.14 Par Value Limitations. Before taking any action that
would cause an adjustment reducing the Purchase Price below the then par
value, if any, of the one one-half of a Common Share issuable upon
exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable
Common Shares at such adjusted Purchase Price.
11.15. Adjustment of Rights Associated with Common Shares.
Notwithstanding anything contained in this Agreement to the contrary, in
the event that the Company shall at any time after the date hereof and
prior to the Distribution Date (i) declare or pay any dividend on the
outstanding Common Shares payable in Common Shares, (ii) effect a
subdivision or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by the payment of dividends payable in
Common Shares), or (iii) combine the outstanding Common Shares into a
greater or lesser number of Common Shares, then in any such case, the
number of Rights associated with each Common Share then outstanding, or
issued or delivered thereafter but prior to the Distribution Date or in
accordance with Section 22, shall be proportionately adjusted so that the
number of Rights thereafter associated with each Common Share following
any such event shall equal the result obtained by multiplying the number
of Rights associated with each Common Share immediately prior to such
event by a fraction, the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of Common
Shares outstanding immediately following the occurrence of such event.
The adjustments provided for in this Section 11.15 shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 or
13, the Company shall: (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Shares a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained
and shall not be deemed to have knowledge of any such adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
13.1 Certain Transactions. In the event that, from and after
the first occurrence of a Trigger Event, directly or indirectly, (A) the
Company shall consolidate with, or merge with and into, any other Person
and the Company shall not be the continuing or surviving corporation, (B)
any Person shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part of the
Common Shares shall be changed into or exchanged for stock or other
securities of the Company or any other Person or cash or any other
property, or (C) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange,
mortgage or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company or one or more wholly-owned
Subsidiaries of the Company in one or more transactions each of which
complies with Section 11.15), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right (other than
Rights which have become void pursuant to Section 11.1.2) shall
thereafter have the right to receive, upon the exercise thereof at a
price per Right equal to the then current Purchase Price multiplied by
the number of Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12),
in accordance with the terms of this Agreement and in lieu of Common
Shares, such number of validly authorized and issued, fully paid, non-
assessable and freely tradable Common Shares of the Principal Party (as
such term is hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (x) multiplying the then-current Purchase Price by the
number of Common Shares for which a Right was exercisable immediately
prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12)
and (y) dividing that product by 50% of the then current per share market
price of the Common Shares of such Principal Party (determined pursuant
to Section 11.4) on the date of consummation of such consolidation,
merger, sale or transfer; provided, that the price per Right so payable
and the number of Common Shares of such Principal Party so receivable
upon exercise of a Right shall thereafter be subject to further
adjustment as appropriate in accordance with Section 11.6 to reflect any
events covered thereby occurring in respect of the Common Shares such
Principal Party after the occurrence of such consolidation, merger, sale
or transfer; (ii) such Principal Party 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 Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) in connection
with such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; provided that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right
shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13.1, such
cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13.1, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for
such cash, shares, rights, warrants and other property. The Company
shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
confirming that the requirements of this Section 13.1 and Section 13.2
shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a
default by the Principal Party under this Agreement as the same shall
have been assumed by the Principal Party pursuant to this Section 13.1
and Section 13.2 and providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party
at its own expense shall:
(1) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date and similarly comply with applicable state
securities laws;
(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the New York Stock
Exchange or such securities exchange, or, if the Common Shares of the
Principal Party shall not be listed or admitted to trading on the New
York Stock Exchange or a national securities exchange, to cause the
Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on Nasdaq or on such other system then in use;
(3) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under
the Exchange Act; and
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal Party
subject to purchase upon exercise of outstanding Rights.
In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws
or other instrument governing its corporate affairs, which provision
would have the effect of: (i) causing such Principal Party to issue
(other than to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or common stock
equivalents of such Principal Party at less than the then current market
price per share thereof (determined pursuant to Section 11.4) or
securities exercisable for, or convertible into, Common Shares or common
stock equivalents of such Principal Party at less than such then current
market price (other than to holders of Rights pursuant to this Section
13), or (ii) providing for any special payment, taxes or similar
provision in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provision of Section 13 then, in such
event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.
The Company covenants and agrees that it shall not, at any time
after the Trigger Event, enter into any transaction of the type described
in clauses (A) through (C) of this Section 13.1 if: (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights, (ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13.2 shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates or Associates, or (iii) the form or nature of organization of
the Principal Party would preclude or limit the exercisability of the
Rights. The provisions of this Section 13 shall similarly apply to
successive transactions of the type described in clause (A), (B) or (C)
of this Section 13.1.
13.2 Principal Party. "Principal Party" shall mean:
(i) in the case of any transaction described in (A) or (B) of
the first sentence of Section 13.1: (1) the Person that is the issuer of
the securities into which the Common Shares are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer
the Common Shares of which have the greatest aggregate market value of
shares outstanding, or (2) if no securities are so issued, (x) the Person
that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the Common
Shares of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting from
the consolidation; provided, however, that in any such case described in
the foregoing clause (A) or (B) of Section 13.1, if the Common Shares of
such Person is not at such time or has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, then (1) if such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which is and has been so registered,
the term "Principal Party" shall refer to such other Person, or (2) if
such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of all of which is and has been so registered,
the term "Principal Party" shall refer to whichever of such Persons is
the issuer of Common Shares having the greatest aggregate market value of
shares outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint ventures, and the Principal Party
in each such case shall bear the obligations set forth in this Section 13
in the same ratio as its interest in such Person bears to the total of
such interests; and
(ii) in the case of any transaction described in (C) of the
first sentence in Section 13.1, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets
or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons is the issuer of Common Shares having the greatest aggregate
market value of shares outstanding.
13.3 Approved Acquisitions. Notwithstanding anything contained
herein to the contrary, upon the consummation of any merger or other
acquisition transaction of the type described in clause (A), (B) or (C)
of Section 13.1 involving the Company pursuant to a merger or other
acquisition agreement between the Company and any Person (or one or more
of such Person's Affiliates or Associates) which agreement has been
approved by the Board of Directors of the Company prior to any Person
becoming an Acquiring Person, this Agreement and the rights of holders of
Rights hereunder shall be terminated in accordance with Section 7.1.
Section 14. Fractional Rights and Fractional Shares.
14.1 Cash in Lieu of Fractional Rights. The Company shall not
be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights (except prior to the
Distribution Date in accordance with Section 11.15). In lieu of such
fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14.1, the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the Rights are not 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 Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the current market value of the
Rights on such date shall be the fair value of the Rights as determined
in good faith by the Board of Directors of the Company or, if at the time
of such determination there is an Acquiring Person, by a nationally
recognized investment banking firm selected by the Board of Directors of
the Company, which shall have the duty to make such determination in a
reasonable and objective manner, which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
14.2 Cash in Lieu of Fractional Common Shares. The Company
shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares upon the
exercise or exchange of Rights. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share (as determined in accordance
with Section 14.1) for the Trading Day immediately prior to the date of
such exercise or exchange.
14.3 Waiver of Right to Receive Fractional Rights or Shares.
The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, except the rights of action given to the Rights Agent
under Section 18, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce this
Agreement, and may institute and maintain any suit, action or proceeding
against the Company to enforce this Agreement, or otherwise enforce or
act in respect of his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach
of this Agreement and shall be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person (including, without
limitation, the Company) subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer with all required certifications
completed; and
(c) the Company and the Rights Agent may deem and treat
the Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on
the Right Certificates or the associated Common Shares 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.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Common
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder in accordance with a fee schedule to be mutually
agreed upon 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 parties agree that, until the
Rights Agent receives proper notice from the Company to issue stock
certificates to Stockholders following a Trigger Event, the Rights Agent
has no obligation to issue such stock certificates. Thereafter, the
Rights Agent will prepare for issuance such stock certificates as
promptly as practicable. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without 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 arising therefrom, directly or indirectly.
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 Right Certificate or certificate for the Common Shares or the
Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, instruction, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation or limited liability company into which
the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation or limited liability
company resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
or limited liability company succeeding to the corporate trust or stock
transfer business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation or limited
liability company would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Right Certificates, by their acceptance thereof, shall be
bound:
20.1 Legal Counsel. The Rights Agent may consult with legal
counsel selected by it (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
20.2 Certificates as to Facts or Matters. Whenever in the
performance of its duties under this Agreement the Rights Agent shall
deem 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 any one of the Chairman
of the Board of Directors, the Chief Executive Officer, the President,
the Chief Financial Officer, any Vice President, the Treasurer, the
Secretary or any Assistant Treasurer or Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
20.4 Reliance on Agreement and Right Certificates. The Rights
Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates
(except as to its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
20.5 No Responsibility as to Certain Matters. The Rights
Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of any covenant
or condition contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability of the
Rights (including the Rights becoming void pursuant to Section 11.1.2) or
any adjustment required under the provisions of Sections 3, 11, 13, 23 or
27 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 evidenced by
Right Certificates after actual notice of any such change or adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares or
other securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares will, when so issued, be
validly authorized and issued, fully paid and non-assessable.
20.6 Further Assurance by Company. 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.
20.7 Authorized Company Officers. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from any one of the Chairman of the
Board of Directors, the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer, the Secretary or
any Assistant Treasurer or Assistant Secretary of the Company, and to
apply to such officers for advice or instructions in connection with its
duties under this Agreement, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting
for these instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Agreement and
the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable to the
Company for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after
the date specified therein (which date shall not be less than three
business days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking of any such action (or the
effective date in the case of omission), the Rights Agent shall have
received written instructions in response to such application specifying
the action to be taken or omitted.
20.8 Freedom to Trade in Company Securities. The Rights Agent
and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not 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.
20.9 Reliance on Attorneys and Agents. The Rights Agent may
execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable
for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any
such act, omission, default, neglect or misconduct, provided that
reasonable care was exercised in the selection and continued employment
thereof.
20.10 Incomplete Certificate. If, with respect to any
Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form
of election to purchase set forth on the reverse thereof, as the case may
be, has not been completed to certify the holder is not an Acquiring
Person (or an Affiliate or Associate thereof), the Rights Agent shall not
take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
20.11 Rights Holders List. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights
Agent shall promptly deliver to the Company a list, as of the most recent
practicable date (or as of such earlier date as may be specified by the
Company), of the holders of record of Rights.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company and to each transfer agent of the Common Shares, as applicable,
by registered or certified mail. Following the Distribution Date, the
Company shall promptly notify the holders of the Right Certificates by
first-class mail of any such resignation. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares, as
applicable, by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the
resigning, removed, or incapacitated Rights Agent shall remit to the
Company, or to any successor Rights Agent designated by the Company, all
books, records, funds, certificates or other documents or instruments of
any kind then in its possession which were acquired by such resigning,
removed or incapacitated Rights Agent in connection with its services as
Rights Agent hereunder, and shall thereafter be discharged from all
duties and obligations hereunder. Following notice of such removal,
resignation or incapacity, the Company shall appoint a successor to such
Rights Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of
the State of New York (or any other state of the United States so long as
such corporation is authorized to do business as a banking institution in
the State of New York) in good standing, having an office in the State of
New York, which is authorized under such laws to exercise stock transfer
or corporate trust powers and is subject to supervision or examination by
Federal or state authority and which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $10 million.
After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment
the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares, as applicable,
and, following the Distribution Date, mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the
issuance or sale of Common Shares following the Distribution Date and
prior to the Expiration Date, the Company shall, with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, granted or awarded, or upon
exercise, conversion or exchange of securities hereinafter issued by the
Company in each case existing prior to the Distribution Date, issue Right
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Right
Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom
such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption.
23.1 Right to Redeem. The Board of Directors of the Company
may, at its option, at any time prior to a Trigger Event, redeem all but
not less than all of the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"), and the Company may, at its option, pay the
Redemption Price in Common Shares (based on the "current per share market
price," determined pursuant to Section 11.4, of the Common Shares at the
time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights by
the Board of Directors may be made effective at such time, on such basis
and subject to such conditions as the Board of Directors in its sole
discretion may establish.
23.2 Redemption Procedures. Immediately upon the action of
the Board of Directors of the Company ordering the redemption of the
Rights (or at such later time as the Board of Directors may establish for
the effectiveness of such redemption), and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. The Company shall promptly
give public notice of such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. The Company shall promptly give, or cause
the Rights Agent to give, notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 27, and
other than in connection with the purchase, acquisition or redemption of
Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose at any time after the earlier of the Shares Acquisition
Date and the Distribution Date (a) to pay any dividend payable in stock
of any class to the holders of Common Shares or to make any other
distribution to the holders of Common Shares (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the
last regular periodic cash dividend theretofore paid or, in case regular
periodic cash dividends have not theretofore been paid, at a rate not in
excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividends,
or a stock dividend on, or a subdivision, combination or reclassification
of the Common Shares), or (b) to offer to the holders of Common Shares
rights or warrants to subscribe for or to purchase any additional Common
Shares or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Common Shares
(other than a reclassification involving only the subdivision of out-
standing Common Shares), or (d) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other Person
(other than pursuant to a merger or other acquisition agreement of the
type described in Section 1.3(ii)(A)(z)), or (e) to effect the
liquidation, dissolution or winding up of the Company, or (f) to declare
or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right Certificate, in accordance with
Section 25, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the
holders of the Common Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a)
or (b) above at least ten (10) days prior to the record date for
determining holders of the Common Shares for purposes of such action, and
in the case of any such other action, at least ten (10) days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares, whichever shall be the
earlier.
In case any event set forth in Section 11.1.2 or Section 13
shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of a
Right Certificate, in accordance with Section 25, a notice of the
occurrence of such event, which notice shall describe the event and the
consequences of the event to holders of Rights under Section 11.1.2 and
Section 13.
Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to
the holders of securities of the Company, including the Rights, for
purposes of this Agreement and no other notice need be given.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
First Health Group Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel and Assistant Secretary
Subject to the provisions of Section 21 and Section 24, any notice or
demand authorized by this Agreement to be given or made by the Company or
by the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Illinois Stock Transfer Company
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Shareholder Services
and
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Shareholder Services
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate
(or, prior to the Distribution Date, to the holder of any certificate
representing Common Shares) shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. For so long as the
Rights are then redeemable, the Company may in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement in any respect
without the approval of any holders of Rights or Common Shares. From and
after the time that the Rights are no longer redeemable, the Company may,
and the Rights Agent shall, if the Company so directs, from time to time
supplement or amend this Agreement without the approval of any holders of
Rights: (i) to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with
any other provisions herein, or (ii) to make any other changes or
provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable, including but not limited to
extending the Final Expiration Date; provided, however, that no such
supplement or amendment shall adversely affect the interests of the
holders of Rights as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), and no such supplement or amendment
may cause the Rights again to become redeemable or cause this Agreement
again to become amendable other than in accordance with this sentence;
provided further, that the right of the Board of Directors to extend the
Distribution Date shall not require any amendment or supplement
hereunder. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Without limiting the
foregoing, at any time prior to such time as any Person becomes an
Acquiring Person, the Company and the Rights Agent may amend this
Agreement to lower the thresholds set forth in Sections 1.1 and 3.1 to
not less than the greater of: (i) any percentage greater than the largest
percentage of the outstanding Common Shares then known by the Company to
be beneficially owned by any Person (other than an Exempt Person), and
(ii) 10%.
Section 27. Exchange.
27.1 Exchange of Common Shares for Rights. The Board of
Directors of the Company may, at its option, at any time after the
occurrence of a Trigger Event, exchange Common Shares for 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
11.1.2) by exchanging at an exchange ratio of that number of Common
Shares having an aggregate value equal to the Spread (with such value
being based on the current per share market price (as determined pursuant
to Section 11.4) on the date of the occurrence of a Trigger Event) per
Right or (ii) that number of Common Shares having an aggregate value
equal to the Spread (with such value being based on the current per share
market price (as determined pursuant to Section 11.4) on the date of the
occurrence of a Trigger Event) per Right, in each case appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right
being hereinafter referred to as the "Exchange Consideration").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Acquiring Person
shall have become the Beneficial Owner of 50% or more of the Common
Shares then outstanding. From and after the occurrence of an event
specified in Section 13.1, any Rights that theretofore have not been
exchanged pursuant to this Section 27.1 shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to
this Section 27.1. The exchange of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish.
27.2 Exchange Procedures. Immediately upon the action of the
Board of Directors of the Company ordering the exchange for any Rights
pursuant to Section 27.1 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 the
Exchange Consideration. 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 shall state the
method by which the exchange of the Common Shares 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 the Rights which have become
void pursuant to the provisions of Section 11.1.2) held by each holder of
Rights.
27.3 Fractional Shares. The Company shall not be required to
issue fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Common Shares would
otherwise be issuable in an amount in cash equal to the same fraction of
the current market value of a whole Common Share. For the purposes of
this Section 27.3, the current market value of a whole Common Share shall
be the current per share market price (as determined pursuant to Section
11.4 for the Trading Day immediately prior to the date of exchange
pursuant to this Section 27.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person or corporation other
than the Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Determination and Actions by the Board of
Directors. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise the rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to: (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights or amend this
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by the
Board of Directors of the Company in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of
the Rights, as such, and all other parties, and (y) not subject the Board
of Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Heading. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
First Health Group Corp.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Counsel and Assistant Secretary
Illinois Stock Transfer Company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
LaSalle National Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER MARCH 19, 2009 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR
ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION
1.3(ii)(A)(z) OF THE AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION
11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.
Right Certificate
First Health Group Corp.
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 Rights Agreement, dated as of March 19,
1999 as the same may be amended from time to time (the "Agreement"),
between First Health Group Corp., a Delaware corporation (the "Company"),
Illinois Stock Transfer Company, an Illinois corporation, and LaSalle
National Bank, an Illinois banking insitution, serving collectively as
the Rights Agent (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date and prior to 5:00 P.M. New York time
on March 19, 2009, at the offices of the Rights Agent, or its successors
as Rights Agent, designated for such purpose, one-half of one fully paid,
nonassessable common share (the "Common Shares") of the Company, at a
purchase price of $100.00 per whole Common Share, subject to adjustment
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and certification duly
executed. The number of Rights evidenced by this Right Certificate (and
the number of Common Shares which may be purchased upon exercise thereof)
set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of March 19, 1999, based on the Common Shares as
constituted at such date. Capitalized terms used in this Right
Certificate without definition shall have the meanings ascribed to them
in the Agreement. As provided in the Agreement, the Purchase Price and
the number of Common Shares which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates. Copies of the Agreement are on file at the
principal offices of the Company and the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the offices of the Rights Agent
designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of Common
Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Agreement, the Board of
Directors may, at its option: (i) redeem the Rights evidenced by this
Right Certificate at a redemption price of $.01 per Right , or (ii)
exchange Common Shares for the Rights evidenced by this Certificate, in
whole or in part.
No fractional Common Shares will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Agreement.
No holder of this Right Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of
the Common Shares or of any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained
in the 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 Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Right Certificate shall have been exercised
as provided in the Agreement.
If any term, provision, covenant or restriction of the
Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of the Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
This Right Certificate shall not be valid or binding for any
purpose until it shall have been counter-signed by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of March 19, 1999.
Attest: First Health Group Corp.
By : ___________________ By: ______________________
Title: ___________________ Title: ______________________
Countersigned:
Illinois Stock Transfer Company,
as Rights Agent
By: __________________
Authorized Signature
LaSalle National Bank,
as Rights Agent
By: __________________
Authorized Signature
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________ hereby sells, assigns and transfers unto
________________________________________________
________________________________________________
(Please print name and address
of transferee)
Rights evidenced by this Right Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint _________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ________________
_____________________
Signature
Signature Guaranteed:
_______________________
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person
or an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof.
Dated: _________________
_________________
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: First Health Group Corp.
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to
purchase the Common Shares issuable upon the exercise of such Rights (or
such other securities or property 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:
____________________________________________________________
(Please print name and address)
____________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining 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:
_____________________
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended.
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person
or an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof.
Dated:_______________
______________________
Signature
__________________________________
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or Form of Election to Purchase is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate hereof
and such Assignment or Election to Purchase will not be honored.
EXHIBIT B
As described in the Rights Agreement, Rights which are
held by or have been held by an Acquiring Person or Associates
or Affiliates thereof (as defined in the Rights Agreement) and certain
transferees thereof shall become null and void and will no longer be
transferable.
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On March 19, 1999, the Board of Directors of First Health Group
Corp. (the "Company") declared a dividend of one right (a "Right") for
each share of common stock, par value $.01 per share (the "Common
Shares"), of the Company outstanding at the close of business on April 5,
1999 (the "Record Date"). As long as the Rights are attached to the
Common Shares, the Company will issue one Right (subject to adjustment)
with each new Common Share so that all such shares will have attached
Rights. When exercisable, each Right will entitle the registered holder
to purchase from the Company one-half of one Common Share at a price of
$100 per whole Common Share, subject to adjustment (the "Purchase
Price"). The description and terms of the Rights are set forth in a
Rights Agreement, dated as of March 19, 1999, as the same may be amended
from time to time (the "Agreement"), between the Company, Illinois Stock
Transfer Company and LaSalle National Bank, collectively serving as the
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the Common Shares (an "Acquiring Person"), or (ii) ten
(10) business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the
commencement or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the Common Shares (the
earlier of (i) and (ii) being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate
together with a copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or
earlier redemption exchange, termination, or expiration of the Rights),
the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the close of business
on the Record Date upon transfer or new issuance of the Common Shares
will contain a notation incorporating the Agreement by reference. Until
the Distribution Date (or earlier redemption, exchange, termination or
expiration of the Rights), the surrender for transfer of any certificates
for Common Shares, with or without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on March 19, 2009, subject to the Company's right to
extend such date (the "Final Expiration Date"), unless earlier redeemed
or exchanged by the Company or terminated.
The Purchase Price payable, and the number of Common Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution: (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of the Common Shares, (ii) upon the grant to holders of
the Common Shares of certain rights or warrants to subscribe for or
purchase Common Shares or convertible securities at less than the current
market price of the Common Shares, or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness, cash,
securities or assets (excluding regular periodic cash dividends at a rate
not in excess of 125% of the rate of the last regular periodic cash
dividend theretofore paid or, in case regular periodic cash dividends
have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends payable
in Common Shares (which dividends will be subject to the adjustment
described in clause (i) above)) or of subscription rights or warrants
(other than those referred to above).
In the event that a Person becomes an Acquiring Person or if the
Company were the surviving corporation in a merger with an Acquiring
Person or any affiliate or associate of an Acquiring Person and the
Common Shares were not changed or exchanged, each holder of a Right,
other than Rights that are or were acquired or beneficially owned by the
Acquiring Person (which Rights will thereafter be void), will thereafter
have the right to receive upon exercise that number of Common Shares
having a market value of two times the then current Purchase Price of the
Right. In the event that, after a person has become an Acquiring Person,
the Company were acquired in a merger or other business combination
transaction or more than 50% of its assets or earning power were sold,
proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction
would have a market value of two times the then current Purchase Price of
the Right.
At any time after a Person becomes an Acquiring Person and prior
to the earlier of one of the events described in the last sentence of the
previous paragraph or the acquisition by such Acquiring Person of 50% or
more of the outstanding Common Shares, the Board of Directors may cause
the Company to exchange the Rights (other than Rights owned by an
Acquiring Person which will have become void), in whole or in part, for
Common Shares at an exchange rate of that number of Common Shares having
an aggregate value equal to the Spread (as defined in the Agreement)
(with such value being based on the then-current per share market price
(as determined pursuant to Section 11.4 of the Agreement) on the date of
the occurrence of a Trigger Event (as defined in the Agreement)) per
Right (subject to adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, a payment in cash will be made based on the market price of the
Common Shares on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price") by the Board of Directors at
any time prior to time that an Acquiring Person has become such. The
redemption of the Rights may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company beyond those as an existing
stockholder, including, without limitation, the right to vote or to
receive dividends.
Any of the provisions of the Agreement may be amended by the Board
of Directors of the Company for so long as the Rights are then
redeemable, and after the Rights are no longer redeemable, the Company
may amend or supplement the Agreement in any manner that does not
adversely affect the interests of the holders of the Rights (other than
an Acquiring Person or an affiliate or associate of an Acquiring Person).
The Company may at any time prior to such time as any person becomes an
Acquiring Person amend the Agreement to lower the thresholds described
above to no less than the greater of: (i) any percentage greater than the
largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any person or group of affiliated or
associated persons (other than an Exempt Person), and (ii) 10%.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A
copy of the Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Agreement, which is
incorporated herein by reference.