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EXHIBIT 99.1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to
time, this "Agreement"), is made and entered into as of May 13, 1999 to be
effective at the close of business on such date, by and between RISCORP, Inc., a
Florida corporation (the "Company"), and First Union National Bank, as Rights
Agent (the "Rights Agent," which term shall include any successor Rights Agent
hereunder).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of (i) one right for each share of Class A Common Stock (as
hereinafter defined) (a "Class A Right") and (ii) one right for each share of
Class B Common Stock (as hereinafter defined) (a "Class B Right"), in each case
in respect of shares held of record as of the close of business on May 28, 1999
(the "Record Time") (the Class A Rights and Class B Rights may be collectively
referred to as a "Right" or the "Rights") and (b) as provided in Section 2.4,
authorized the issuance of one Class A Right in respect of each share of Class A
Common Stock and one Class B Right in respect of each share of Class B Common
Stock issued after the Record Time and prior to the Separation Time (as
hereinafter defined) and, to the extent provided in Section 5.3, each share of
Class A Common Stock or Class B Common Stock, as the case may be, issued after
the Separation Time;
WHEREAS, subject to Sections 3.1, 5.1 and 5.10, each Right entitles the
holder thereof, after the Separation Time, to purchase securities of the Company
(or, in certain cases, of certain other entities) pursuant to the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of
5% or more of the outstanding shares of Class A Common Stock; provided, however,
that the term "Acquiring Person" shall not include any Person (i) who is the
Beneficial Owner of 5% or more of the outstanding shares of Class A Common Stock
on the date of this Agreement or who shall become the Beneficial Owner of 5% or
more of the outstanding shares of Class A Common Stock solely as a result of an
acquisition by the Company of shares of Class A Common Stock, until such time
hereafter or thereafter as such Person shall become the Beneficial Owner (other
than by means of a stock dividend or stock split) of any additional shares of
Class A Common Stock, (ii) who is the Beneficial owner of 5%, or more of the
outstanding shares of Class A Common Stock but who acquired Beneficial Ownership
of shares of Class A Common Stock without any plan or intention to seek or
affect control of the Company, if such Person promptly enters into an
irrevocable commitment promptly to divest, and thereafter promptly divests
(without exercising or retaining any power, including voting power, with respect
to such shares), sufficient shares of Class A Common Stock (or securities
convertible into,
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exchangeable into or exercisable for Class A Common Stock) so that such Person
ceases to be the Beneficial owner of 5% or more of the outstanding shares of
Class A Common Stock or (iii) who Beneficially Owns shares of Class A Common
Stock consisting solely of one or more of (A) shares of Class A Common Stock
Beneficially Owned pursuant to the grant or exercise of an option granted to
such Person by the Company in connection with an agreement to merge with, or
acquire, the Company entered into prior to a Flip-In Date, (B) shares of Class A
Common Stock (or securities convertible into, exchangeable into or exercisable
for Class A Common Stock), Beneficially Owned by such Person or its Affiliates
or Associates at the time of grant of such option or (C) shares of Class A
Common Stock (or securities convertible into, exchangeable into or exercisable
for Class A Common Stock) acquired by Affiliates or Associates of such Person
after the time of such grant which, in the aggregate, amount to less than 1% of
the outstanding shares of Class A Common Stock. In addition, the Company, any
wholly owned Subsidiary of the Company and any employee stock ownership or other
employee benefit plan of the Company or a wholly owned Subsidiary of the Company
shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as such
Rule is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rule 13d-3 and 13d-5 under the
Securities Exchange Act, as such Rules are in effect on the date of this
Agreement as well as any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of time
or the occurrence of conditions) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner", or to have
"Beneficial Ownership" of, or to "Beneficially Own", any security (i) solely
because such security has been tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered security is accepted for payment or exchange or (ii) solely because
such Person or any of such Person's Affiliates or Associates has or shares the
power to vote or direct the voting of such security pursuant to a revocable
proxy given in response to a public proxy or consent solicitation made to more
than ten holders of shares of a class of stock of the Company registered under
Section 12 of the Securities Exchange Act of 1934 and pursuant to, and in
accordance with, the applicable rules and regulations under the Securities
Exchange Act of 1934, except if such power (or the arrangements relating
thereto) is then reportable under Item 6 of Schedule 13D under the Securities
Exchange Act of 1934 (or any similar provision of a comparable or successor
report). Notwithstanding the foregoing, no officer or director of the Company
shall be deemed to Beneficially Own any securities of any other Person by virtue
of any actions such officer or director takes in such capacity. For purposes of
this Agreement, in determining the percentage of the outstanding shares of
Common Stock with respect to which a Person is the Beneficial Owner, all shares
as to which such Person is deemed the Beneficial Owner shall be deemed
outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Sarasota, Florida are generally authorized
or obligated by law or executive order to close.
"Class A Common Stock" shall mean the shares of Class A Common Stock,
par value $0.01 per share, of the Company.
"Class A Exercise Price" shall mean, as of any date, the price at which
a holder may purchase the securities issuable upon exercise of one whole Class A
Right. Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall equal $10.00.
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"Class A Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company created by the
Articles of Amendment to the Amended and Restated Articles of Incorporation in
substantially the form set forth in Exhibit B hereto appropriately completed.
"Class B Common Stock" shall mean the shares of Class B Common Stock,
par value $0.01 per share, of the Company.
"Class B Exercise Price" shall mean, as of any date, the price at which
a holder may purchase the securities issuable upon exercise of one whole Class B
Right. Until adjustment thereof in accordance with the terms hereof, the Class B
Exercise Price shall equal $10.00.
"Class B Preferred Stock" shall mean the Series B Junior Participating
Preferred Stock, par value $0.01 per share, of the Company created by the
Articles of Amendment to the Amended and Restated Articles of Incorporation in
substantially the form set forth in Exhibit B hereto appropriately completed.
"Close of business" on any given date shall mean 5:00 p.m. Sarasota,
Florida time on such date (or, if such date is not a Business Day, 5:00 p.m.
Sarasota, Florida time on the next succeeding Business Day).
"Common Stock" shall mean the Class A Common Stock or the Class B
Common Stock, or both, as appropriate in the context used.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean the Class A Exercise Price or the Class B
Exercise Price, or both, as appropriate in the context used.
"Expiration Time" shall mean the earliest of (i) the Exchange Time,
(ii) the Termination Time, (iii) May 12, 2009 and (iv) upon the merger of the
Company into another corporation pursuant to an agreement entered into prior to
a Flip-In Date.
"Flip-In Date" shall mean the tenth business day after any Stock
Acquisition Date or such earlier or later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Flip-In
Date that would otherwise have occurred.
"Flip-Over Entity" for purposes of Section 3.2, shall mean (i) in the
case of a Flip-Over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of Class
A Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-Over Transaction or Event and (ii) in
the case of a Flip-Over Transaction or Event referred to in clause (ii) of the
definition thereof, the Person receiving the greatest portion of the assets or
earning power being transferred in such Flip-Over Transaction or Event, provided
in all cases if such Person is a subsidiary of a corporation, the parent
corporation shall be the Flip-Over Entity.
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"Flip-Over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of directors
(or other persons similarly responsible for direction of the business and
affairs) of the Flip-Over Entity.
"Flip-Over Transaction or Event" shall mean a transaction or series of
transactions after a Flip-In Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person Controls the Board
of Directors of the Company and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or share
exchange relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Class A Common Stock or (B) the
Person with whom the transaction or series of transactions occurs is the
Acquiring Person or an Affiliate or Associate of the Acquiring Person or (ii)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) assets (A) aggregating more than 50% of the
assets (measured by either book value or fair market value) or (B) generating
more than 50% of the operating income or cash flow, of the Company and its
Subsidiaries (taken as a whole) to any Person (other than the Company or one or
more of its wholly owned Subsidiaries) or to two or more such Persons which are
Affiliates or Associates or otherwise acting in concert, if, at the time of the
entry by the Company (or any such Subsidiary) into an agreement with respect to
such sale or transfer of assets, the Acquiring Person Controls the Board of
Directors of the Company. An Acquiring Person shall be deemed to "Control" the
Company's Board of Directors when, following a Flip-In Date, the Persons who
were directors of the Company before the Flip-In Date shall cease to constitute
a majority of the Company's Board of Directors.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, 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, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by The Nasdaq Stock Market or such other system
then in use, or, if on any such date the securities are not listed or admitted
to trading on any national securities exchange or 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 securities selected by the
Board of Directors of the Company; provided, however, that if on any such date
the securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share
of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights Agent.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934, as such Rule is in effect on the date of this Agreement), corporation or
other entity.
"Separation Time" shall mean the close of business on the earlier of
(i) the tenth business day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer
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which, if consummated, would result in such Person's becoming an Acquiring
Person and (ii) the Flip-In Date; provided, that if the foregoing results in the
Separation Time being prior to the Record Time, the Separation Time shall be the
Record Time and provided further, that if any tender or exchange offer referred
to in clause (i) of this paragraph is canceled, terminated or otherwise
withdrawn prior to the Separation Time without the purchase of any shares of
Class A Common Stock pursuant thereto, such offer shall be deemed, for purposes
of this paragraph, never to have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that an Acquiring Person has become
such.
"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities or
a majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"Termination Time" shall mean the time at which the right to exercise
the Class A Rights and the Class B Rights shall terminate pursuant to Section
5.1 hereof.
"Trading Day," when used with respect to any securities, shall mean a
day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the New
York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record Time,
the Company will mail a letter summarizing the terms of (a) the Class A Rights
to each holder of record of Class A Common Stock and (b) the Class B Rights to
each holder of record of Class B Common Stock, in each case as of the Record
Time, at such holder's address as shown by the records of the Company.
2.2 Legend on Stock Certificates. Certificates for the Class A Common
Stock and Class B Common Stock issued after the Record Time but prior to the
Separation Time shall evidence one Class A Right or Class B Right, as the case
may be, for each share represented thereby and shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
"Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
hereof to certain [Class A/Class B] Rights as set forth in a Rights
Agreement, dated as of May 13, 1999 (as such may be amended from time
to time, the "Rights Agreement"), between RISCORP, Inc. (the "Company")
and First Union National Bank, as Rights Agent, the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such [Class
A/Class B] Rights may be terminated, may become exercisable for
securities or assets of the Company or of another entity, may be
exchanged for shares of [Class A/ClassB] Common Stock or other
securities or assets of the Company, may expire, may become void (if
they are "Beneficially Owned" by an "Acquiring Person" or an Affiliate
or Associate thereof, as such terms are defined in the Rights
Agreement, or by any transferee of any of the foregoing) or may
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be evidenced by separate certificates and may no longer be evidenced by
this certificate. The Company will mail or arrange for the mailing of a
copy of the Rights Agreement to the holder of this certificate without
charge promptly after the receipt of a written request therefor."
Certificates representing shares of Class A Common Stock or Class B Common Stock
that are issued and outstanding at the Record Time shall evidence one Class A
Right for each share of Class A Common Stock evidenced thereby and one Class B
Right for each share of Class B Common Stock evidenced thereby notwithstanding
the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to
Sections 3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, (i)
each Class A Right will entitle the holder thereof, after the Separation Time
and prior to the Expiration Time, to purchase, for the Class A Exercise Price,
one one-thousandth (1/1000th) of a share of Class A Preferred Stock and (ii)
each Class B right will entitle the holder thereof, after the Separation Time
and prior to the Expiration Time, to purchase, for the Class B Exercise Price,
one one-thousandth (1/1000th) of a share of Class B Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised and
(ii) each Right will be evidenced by the certificate for the associated share of
Common Stock (together, in the case of certificates issued prior to the Record
Time, with the letter or notice mailed to the record holder thereof pursuant to
Section 2.1) and will be transferable only together with, and will be
transferred by a transfer (whether with or without such letter or notice) of,
such associated share.
(c) Subject to this Section 2.3 and to Sections 3.1, 5.1 and 5.10,
after the Separation Time and prior to the Expiration Time, the Rights (i) may
be exercised and (ii) may be transferred independent of shares of Common Stock.
Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than any
Person whose Rights have become void pursuant to Section 3.1(b)), at such
holder's address as shown by the records of the Company (the Company hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a certificate (a "Rights Certificate") in substantially the form
of Exhibit A-1 hereto appropriately completed, representing the number of Class
A Rights held by such holder at the Separation Time and a Rights Certificate in
substantially the form of Exhibit A-2 hereto appropriately completed,
representing the number of Class B rights held by such holder at the Separation
Time, in each case having 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 law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any national securities
exchange or quotation system on which the Rights may from time to time be listed
or traded, or to conform to usage, and (y) a disclosure statement describing the
Rights.
(d) Subject to Sections 3.1, 5.1 and 5.10, Class A Rights and
Class B Rights may be exercised on any Business Day after the Separation Time
and prior to the Expiration Time by submitting to the Rights Agent the Rights
Certificate evidencing such Rights with an Election to Exercise (an "Election to
Exercise") substantially in the form attached to the appropriate Rights
Certificate duly completed, accompanied by payment in cash, or by certified or
official bank check or money order payable to the order of the Company, of a sum
equal to (i) in the case of Class A Rights, the Class A Exercise Price
multiplied by the number of Class A Rights being exercised and (ii) in the case
of Class B Rights, the Class B Exercise Price multiplied by the number of Class
B Rights being exercised, together in each case with a sum sufficient to cover
any transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for shares or depository receipts (or both) in a name
other than that of the holder of the Class A Rights or Class B Rights being
exercised.
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(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and subject to
Sections 3.1, 5.1 and 5.10, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates evidencing such number of
shares or other securities to be purchased (the Company hereby irrevocably
authorizing its transfer agents to comply with all such requisitions) and (B) if
the Company elects pursuant to Section 5.5 not to issue certificates
representing fractional shares, requisition from the depository selected by the
Company depository receipts representing the fractional shares to be purchased
or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 and (ii) after receipt of such
certificates, depository receipts and/or cash, deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered (in the
case of certificates or depository receipts) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable;
(ii) take all such action as may be necessary to comply with any applicable
requirements of the Securities Act of 1933 or the Securities Exchange Act of
1934, and the rules and regulations thereunder, and any other applicable law,
rule or regulation, in connection with the issuance of any shares upon exercise
of Rights; and (iii) pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any shares issued upon the
exercise of Rights, provided that the Company shall not be required to pay any
transfer tax or charge which may be payable in respect of any transfer involved
in the transfer or delivery of Rights Certificates or the issuance or delivery
of certificates for shares in a name other than that of the holder of the Rights
being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the
event the Company shall at any time after the Record Time and prior to the
Separation Time (i) declare or pay a dividend on Class A Common Stock payable in
Class A Common Stock or a dividend on Class B Common Stock payable in Class B
Common Stock, (ii) subdivide the outstanding Class A Common Stock or Class B
Common Stock or (iii) combine the outstanding Class A Common Stock or Class B
Common Stock into a smaller number of shares, (x) the Exercise Price in effect
after such adjustment will be equal to the Exercise Price in effect immediately
prior to such adjustment divided by the number of shares (the "Expansion
Factor") that a holder of one share immediately prior to such dividend,
subdivision or combination would hold thereafter as a result thereof and (y)
each Right held prior to such adjustment will become that number of Rights equal
to the Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares with respect to which the original Rights were
associated (if they remain outstanding) and the shares issued in respect of such
dividend, subdivision or combination, so that each such share will have exactly
one Right associated with it. Each adjustment made pursuant to this paragraph
shall be made as of the payment or effective date for the applicable dividend,
subdivision or combination.
In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue any shares of Class A Common Stock or Class B
Common Stock otherwise than in a transaction referred to in the preceding
paragraph, each such share of Class A Common Stock or Class B Common Stock so
issued shall automatically have one new Class A Right or Class B Right, as the
case may be, associated with it, which Right shall be evidenced by the
certificate representing such share. To the extent provided in Section 5.3,
Class A Rights and Class B Rights shall be issued by the Company in respect of
shares of Class A Common Stock and Class B Common Stock, as the case may be,
that are issued or sold by the Company after the Separation Time.
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(b) In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue or distribute any securities or
assets in respect of, in lieu of or in exchange for Class A Common Stock or
Class B Common Stock (other than pursuant to a regular periodic cash dividend or
a dividend paid solely in Class A Common Stock or Class B Common Stock) whether
by dividend, in a reclassification or recapitalization (including any such
transaction involving a merger, consolidation or share exchange), or otherwise,
the Company shall make such adjustments, if any, in the Class A Exercise Price
or Class B Exercise Price, as the case may be, number of Class A Rights or Class
B Rights, as the case may be, and/or securities or other property purchasable
upon exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and, if the Company so directs, the Rights Agent shall amend this
Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Class A Common Stock
and Class B Common Stock a copy of such certificate. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
and shall not be deemed to have knowledge of any such adjustment unless and
until it shall have received such a certificate.
Rights certificates shall represent the securities purchasable under
the terms of this Agreement, including any adjustment or change in the
securities purchasable upon exercise of the Rights, even though such
certificates may continue to express the securities purchasable at the time of
issuance of the initial Rights Certificates.
2.5 Date on Which Exercise is Effective. Each person in whose name
any certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Exercise Price for such Rights (and any
applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the stock transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the stock transfer books of the Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates. (a) The Rights Certificates shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section
3.1(b), the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof. No
Rights Certificate shall be valid for any purpose unless manually countersigned
by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
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2.7 Registration, Registration of Transfer and Exchange. (a) After
the Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Class A Rights and
Class B Rights. The Rights Agent is hereby appointed "Rights Registrar" for the
purpose of maintaining the Rights Register for the Company and registering Class
A Rights and Class B Rights and transfers of Class A Rights and Class B Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Section 2.7(c) and (d), the Company will
execute and the Rights Agent will countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates evidencing the same
aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be entitled
to the same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights Agent,
as the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any new
Rights Certificate under this Section 2.7, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section 3.1(b),
been exchanged under Section 3.1(c) or been terminated under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a)
If any mutilated Rights Certificate is surrendered to the Rights Agent prior to
the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the
Company shall execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same number of Rights
as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the
absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence
an original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and, subject to Section 3.1(b),
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shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the person in whose
name such Rights Certificate (or, prior to the Separation Time, such associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary. As used in
this Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly canceled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly canceled by the Rights Agent.
No Rights Certificates shall be countersigned in lieu of or in exchange for any
Rights Certificates canceled as provided in this Section 2.10, except as
expressly permitted by this Agreement. The Rights Agent shall return all
canceled Rights Certificates to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the associated
share of Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate) for registration
of transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Section 2.4(b) or 5.4 hereof.
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ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time a
Flip-In Date shall occur, except as provided in this Section 3.1, each Class A
Right and each Class B Right shall constitute the right to purchase from the
Company, upon exercise thereof in accordance with the terms hereof (but subject
to Section 5.10), that number of shares of Class A Common Stock or Class B
Common Stock, as the case may be, having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Class A Exercise Price or Class B Exercise
Price, as the case may be, for an amount in cash equal to such Exercise Price
(such right to be appropriately adjusted in order to protect the interests of
the holders of Class A Rights or Class B Rights generally in the event that on
or after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Class A Common Stock or the Class B Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete the certification set forth at the end of the form of assignment or
notice of election to exercise and provide such additional evidence of the
identity of the Beneficial Owner and its Affiliates and Associates (or former
Beneficial owners and their Affiliates and Associates) as the Company shall
reasonably request, then the Company shall be entitled conclusively to deem the
Beneficial owner thereof to be an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at
any time after a Flip-In Date and prior to the time that an Acquiring Person
becomes the Beneficial owner of more than 50% of the outstanding shares of Class
A Common Stock, elect to exchange all (but not less than all) the then
outstanding Class A Rights (which shall not include Class A Rights that have
become void pursuant to the provisions of Section 3.1(b)) for shares of Class A
Common Stock and all (but not less than all) the then outstanding Class B Rights
(which shall not include Class B Rights that have become void pursuant to the
provisions of Section 3.1(b)) for shares of Class B Common Stock, in each case
at an exchange ratio of one share per Right, appropriately adjusted in order to
protect the interests of holders of Rights generally in the event that after the
Separation Time an event of a type analogous to any of the events described in
Section 2.4(a) or (b) shall have occurred with respect to the Common Stock (such
exchange ratio, as adjusted from time to time, being hereinafter referred to as
the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Class A Rights and Class B Rights, without any further
action and without any notice, the right to exercise such Rights will terminate
and each Class A Right and each Class B Right (other than Rights that have
become void pursuant to Section 3.1(b)) will thereafter represent only the right
to receive a number of shares of Class A Common Stock or Class B Common Stock,
as the case may be, equal to the Exchange Ratio. Promptly after the action of
the Board of Directors electing to exchange the Rights, the Company shall give
notice thereof (specifying the steps to be taken to receive shares in exchange
for Rights) to the Rights Agent and the holders of the Rights (other than Rights
that have become void pursuant to Section 3.1(b)) outstanding immediately prior
thereto by mailing such notice in accordance with Section 5.9.
Each Person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall for
all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of any applicable taxes and other governmental charges payable by the holder
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was made; provided, however, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
Certificate shall be dated, the next succeeding Business Day on which the stock
transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section
3.1(a) or (c) to issue shares of (i) Class A Common Stock upon exercise of or in
exchange for Class A Rights, the Company, at its option, may substitute therefor
shares of Class A Preferred Stock, at a ratio of one one-thousandth (1/1000th)
of a share of Class A Preferred Stock for each share of Class A Common Stock so
issuable and (ii) Class B Common Stock upon exercise of or in exchange for Class
B Rights, the Company, at its option, may substitute therefor shares of Class B
Preferred Stock, at a ratio of one one-thousandth (1/1000th) of a share of Class
B Preferred Stock for each share of Class B Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Class A Common Stock, Class B Common
Stock, Class A Preferred Stock or Class B Preferred Stock of the Company to
permit the exercise or exchange in full of the Rights in accordance with Section
3.1(a) or (c), the Company shall either (i) call a meeting of shareholders
seeking approval to cause sufficient additional shares to be authorized
(provided that if such approval is not obtained the Company will take the action
specified in clause (ii) of this sentence) or (ii) take such action as shall be
necessary to ensure and provide, to the extent permitted by applicable law and
any agreements or instruments in effect on the Stock Acquisition Date to which
it is a party, that each Right shall thereafter constitute the right to receive,
(x) at the Company's option, either (A) in return for the Exercise Price, debt
or equity securities or other assets (or a combination thereof) having a fair
value equal to twice the Exercise Price, or (B) without payment of consideration
(except as otherwise required by applicable law), debt or equity securities or
other assets (or a combination thereof) having a fair value equal to the
Exercise Price, or (y) if the Board of Directors of the Company elects to
exchange the Rights in accordance with Section 3.1(c), debt or equity securities
or other assets (or a combination thereof) having a fair value equal to the
product of the Market Price of a share of Class A Common Stock on the Flip-In
Date times the Exchange Ratio in effect on the Flip-In Date, where in any case
set forth in (x) or (y) above the fair value of such debt or equity securities
or other assets shall be as determined in good faith by the Board of Directors
of the Company, after consultation with a nationally recognized investment
banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall
not enter into any agreement with respect to, consummate or permit to occur any
Flip-Over Transaction or Event unless and until it shall have entered into a
supplemental agreement with the Flip-Over Entity, for the benefit of the holders
of the Rights, providing that, upon consummation or occurrence of the Flip-Over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-Over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-Over Stock of the Flip-Over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-Over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Flip-Over Stock) and (ii) the Flip-Over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-Over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this Section
3.2 shall apply to successive Flip-Over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be
terminated pursuant to Section 5.1 hereof in connection therewith, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-Over Transaction or Event if at the time thereof there are any
rights, warrants or securities outstanding or any other arrangements, agreements
or instruments that would eliminate or otherwise diminish in any material
respect the benefits intended to be afforded by this Rights Agreement to the
holders of Rights upon consummation of such transaction.
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ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to
act as agent for the Company in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent, its directors,
officers, employees and agents for, and to hold each of them harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent or such indemnified party,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and expenses of
defending against any claim of liability. The indemnity provided in this Section
4.1(a) shall survive the expiration of the Rights and the termination of this
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any certificate for
securities purchasable upon exercise of Rights, Rights Certificate, certificate
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
(c) The indemnity provided in this Section 4.1 shall survive the
expiration of the Rights and the termination of this Agreement.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
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4.3 Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel will
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the President or any Vice President and by the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate will be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of any provision of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any certificate
for securities purchasable upon exercise of Rights or Rights Certificate (except
its countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b) hereof) or any adjustment required under any provision of this
Agreement or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of the
certificate contemplated by Section 2.4 describing any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise
of Rights or any Rights or as to whether any securities purchasable upon
exercise of Rights will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the President or any Vice President or
the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such persons for advice or
instructions in connection with its duties, and it shall not be liable for any
action
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taken or suffered by it in good faith in accordance with instructions of any
such person, or for any delay in acting while awaiting instructions. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Agreement and the date on or
after which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not be less
than five Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act 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.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided the Rights Agent was not grossly negligent in
the selection and continued employment thereof.
(j) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(k) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
(l) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) The Company agrees that it will provide prompt written notice
to the Rights Agent of any transaction or event of which the Company becomes
aware that has resulted in or that is reasonably likely to result in the
occurrence of a Flip-In Date, a Flip-Over Transaction or Event, the Separation
Time or a Stock Acquisition Date.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights Agent upon 30 days notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the Company
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of any Rights (which
holder shall, with such notice, submit
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such holder's Rights Certificate for inspection by the Company), then the holder
of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of the State of Florida or
any other State of the United States, in good standing, which is authorized
under such laws to exercise the powers of the Rights Agent contemplated by this
Agreement and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an affiliate of a
corporation described in the immediately preceding clause (a). After
appointment, the successor Rights Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
ARTICLE V
MISCELLANEOUS
5.1 Termination. (a) The Board of Directors of the Company may, at
its option, at any time prior to the close of business on the Flip-In Date,
elect to terminate the Rights without any payment to any holder thereof.
(b) Immediately upon the action of the Board of Directors of the
Company electing to terminate the Rights (or, if the resolution of the Board of
Directors electing to terminate the Rights states that the termination will not
be effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter be null and void.
5.2 Expiration. The Class A Rights and the Class B Rights and this
Agreement shall expire at the Expiration Time and no Person shall have any
rights pursuant to this Agreement or any Right after the Expiration Time,
except, if the Class A Rights or Class B Rights are exchanged, as provided in
Section 3.1 hereof.
5.3 Issuance of New Rights Certificate. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Class A Common Stock or Class
B Common Stock by the Company following the Separation Time and prior to the
Expiration Time pursuant to the terms of securities convertible or redeemable
into shares of Class A Common Stock or Class B Common Stock, as the case may be,
or to options, in each case issued or granted prior to, and outstanding at, the
Separation Time, the Company shall issue to the holders of such shares, Rights
Certificates representing the appropriate number of Rights in connection with
the issuance or sale of such shares; provided, however, in each case, (i) no
such Rights 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 to the Person to whom
such Rights Certificates would be issued, (ii) no such Rights Certificates shall
be issued if, and to the extent that, appropriate adjustment shall have
otherwise been made in lieu of the issuance thereof, and (iii) the Company shall
have no obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
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5.4 Supplements and Amendments. The Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Rights (i) prior to the close of business on the Flip-In Date, in
any respect and (ii) after the close of business on the Flip-In Date, to make
any changes that the Company may deem necessary or desirable and which shall not
materially and adversely affect the interests of the holders of Rights generally
or in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be inconsistent with any other provisions herein or
otherwise defective. The Rights Agent will duly execute and deliver any
supplement or amendment hereto requested by the Company upon receipt of a
certificate from the Company that such supplement or amendment satisfies the
terms of the preceding sentence. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment that changes the rights
and duties of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent.
5.5 Fractional Shares. If the Company elects not to issue
certificates representing fractional shares upon exercise of Rights, the Company
shall, in lieu thereof, in the sole discretion of the Board of Directors, either
(a) evidence such fractional shares by depository receipts issued pursuant to an
appropriate agreement between the Company and a depository selected by it,
providing that each holder of a depository receipt shall have all of the rights,
privileges and preferences to which such holder would be entitled as a
beneficial owner of such fractional share, or (b) sell such shares on behalf of
the holders of Rights and pay to the registered holder of such Rights the
appropriate fraction of price per share received upon such sale.
5.6 Rights of Action. Subject to the terms of this Agreement
(including Section 3.1(b)), rights of action in respect of this Agreement, other
than rights of action vested solely in the Rights Agent, are vested in the
respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder Rights in the manner provided in such
holder's Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as such,
of any Rights shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of shares or any other securities which may at any time be
issuable on the exercise of such Rights, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any Rights,
as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting shareholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised or exchanged in
accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose
after the Separation Time and prior to the Expiration Time (i) to effect or
permit occurrence of any Flip-Over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right, in accordance with Section 5.9
hereof, a notice of such proposed action, which shall specify the date on which
such Flip-Over Transaction or Event, liquidation, dissolution, or winding up is
to take place, and such notice shall be so given at least 20 Business Days prior
to the date of the taking of such proposed action.
-17-
19
5.9 Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows
RISCORP, Inc.
One Sarasota Tower
Suite 608
2 North Tamiami Trial
ββββββββ, βββββββ βββββ
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be
given or made by the Company or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
First Union National Bank
ββββ ββββ β.β. ββββββ βββββββββ
3 C 3
Charlotte, North Carolina 28288-1153
Attn: ββββ βββββββββ, Assistant Vice President
Notices or demands authorized or required by this Agreement to be given
or made by the Company or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the Separation
Time, on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1 or to comply with federal or state securities laws, the Company may
suspend the exercisability of the Rights for ninety (90) days and any additional
period that may be reasonable in order to take such action or comply with such
laws. In the event of any such suspension, the Company shall issue as promptly
as practicable a public announcement stating that the exercisability or
exchangeability of the Rights has been temporarily suspended. Notice thereof
pursuant to Section 5.9 shall not be required.
Failure to give a notice pursuant to the provisions of this Agreement
shall not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the Company
or any other Person the securities of which are purchasable upon exercise of
Rights fails to fulfill any of its obligations pursuant to this Agreement, then
the Company or such Person will reimburse the holder of any Rights for the costs
and expenses (including legal fees) incurred by such holder in actions to
enforce such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under
-18-
20
this Agreement and this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF FLORIDA 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.
5.17 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.
5.18 Severability. If any term or provision hereof or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to circumstances
other than those as to which it is held invalid or unenforceable.
[Signatures on next page]
-19-
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RISCORP, INC.
By: /s/ βββββββββ β. ββββββ
---------------------------------
βββββββββ β. ββββββ
President
FIRST UNION NATIONAL BANK
By: /s/ ββββ βββββββββ
---------------------------------
ββββ βββββββββ
Assistant Vice President
-20-
22
EXHIBIT A-1
(Form of Class A Rights Certificate)
Certificate No. W- Class A Rights
THE CLASS A RIGHTS ARE SUBJECT TO TERMINATION OR MANDATORY EXCHANGE, AT
THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. CLASS A RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
Class A Rights Certificate
RISCORP, INC.
This certifies that _______________________, or registered assigns, is the
registered holder of the number of Class A Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement, dated as of May 13,
1999 (as amended from time to time, the "Rights Agreement"), between RISCORP,
Inc., a Florida corporation (the "Company"), and First Union National Bank, as
Rights Agent (the "Rights Agent," which term shall include any successor Rights
Agent under the Rights Agreement), to purchase from the Company at any time
after the Separation Time (as such term is defined in the Rights Agreement) and
prior to the close of business on May 12, 2009, one one-thousandth (1/1,000) of
a fully paid share of Series A Junior Participating Preferred Stock, par value
$0.01 per share (the "Class A Preferred Stock"), of the Company (subject to
adjustment as provided in the Rights Agreement) at the Exercise Price referred
to below, upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed at the principal office of the Rights
Agent. The Exercise Price shall initially be $10.00 per Class A Right and shall
be subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Class A Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Class A Preferred Stock, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Class A Rights equal to the aggregate number
of Class A Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Class A Rights
not exercised.
Subject to the provisions of the Rights Agreement, each Class A Right evidenced
by this Certificate may be (a) terminated by the Company under certain
circumstances, at its option, or (b) exchanged by the Company under certain
circumstances, at its option, for one share of Class A Common Stock or one
one-thousandth (1/1,000) of a share of Class A Preferred Stock per Class A Right
(or, in certain cases, other securities or assets of the Company), subject in
each case to adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any
23
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Class A Rights evidenced by this Rights
Certificate shall have been exercised or exchanged as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Date:
--------------------------
ATTEST: RISCORP, INC.
By:
---------------------------------- ---------------------------------
Secretary
Countersigned:
FIRST UNION NATIONAL BANK,
as Rights Agent
By:
-------------------------------
Authorized Officer
-2-
24
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers unto
------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:____________________, ___.
Signature Guaranteed:
------------------------------------
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Class A
Rights and shares of Class A Common Stock, that the Class A Rights evidenced by
this Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial owner of the
Class A Rights evidenced by the enclosed Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Class A
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
25
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise the Rights Certificate.)
TO: RISCORP, INC.
The undersigned hereby irrevocably elects to exercise _________________ whole
Class A Rights represented by the attached Rights Certificate to purchase the
shares of Series A Junior Participating Preferred Stock issuable upon the
exercise of such Class A Rights and requests that certificates for such shares
be issued in the name of:
--------------------------------------------
Address:
------------------------------------
Social Security or other Taxpayer
Identification Number:
----------------------
If such number of Class A Rights shall not be all the Class A Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Class A Rights shall be registered in the name of and delivered to:
--------------------------------------------
Address:
------------------------------------
Social Security or other Taxpayer
Identification Number:
----------------------
Dated:____________________, ___.
Signature Guaranteed:
------------------------------------
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Class A
Rights and shares of Class A Common Stock, that the Rights evidenced by this
Rights Certificate are not, and, to the knowledge of the undersigned, have never
been, Beneficially owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial owner of the
Class A Rights evidenced by the enclosed Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Class A
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
26
EXHIBIT A-2
(Form of Class B Rights Certificate)
Certificate No. W- Class B Rights
THE CLASS B RIGHTS ARE SUBJECT TO TERMINATION OR MANDATORY EXCHANGE, AT
THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. CLASS B RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
Class B Rights Certificate
RISCORP, INC.
This certifies that _______________________, or registered assigns, is the
registered holder of the number of Class B Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement, dated as of May 13,
1999 (as amended from time to time, the "Rights Agreement"), between RISCORP,
Inc., a Florida corporation (the "Company"), and First Union National Bank, as
Rights Agent (the "Rights Agent," which term shall include any successor Rights
Agent under the Rights Agreement), to purchase from the Company at any time
after the Separation Time (as such term is defined in the Rights Agreement) and
prior to the close of business on May 12, 2009, one one-thousandth (1/1,000) of
a fully paid share of Series B Junior Participating Preferred Stock, par value
$0.01 per share (the "Class B Preferred Stock"), of the Company (subject to
adjustment as provided in the Rights Agreement) at the Exercise Price referred
to below, upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed at the principal office of the Rights
Agent. The Exercise Price shall initially be $10.00 per Class B Right and shall
be subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Class B Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Class B Preferred Stock, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Class B Rights equal to the aggregate number
of Class B Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Class B Rights
not exercised.
Subject to the provisions of the Rights Agreement, each Class B Right evidenced
by this Certificate may be (a) terminated by the Company under certain
circumstances, at its option, or (b) exchanged by the Company under certain
circumstances, at its option, for one share of Class B Common Stock or one
one-thousandth (1/1,000) of a share of Class B Preferred Stock per Class B Right
(or, in certain cases, other securities or assets of the Company), subject in
each case to adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights
27
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Class B Rights evidenced by this Rights Certificate shall have been
exercised or exchanged as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Date:
--------------------------
ATTEST: RISCORP, INC.
By:
------------------------------------ ---------------------------------
Secretary
Countersigned:
FIRST UNION NATIONAL BANK,
as Rights Agent
By:
---------------------------------
Authorized Officer
-2-
28
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers unto
------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:____________________, ___.
Signature Guaranteed:
------------------------------------
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Class B
Rights and shares of Class B Common Stock, that the Class B Rights evidenced by
this Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial owner of the
Class B Rights evidenced by the enclosed Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Class B
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
29
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise the Rights Certificate.)
TO: RISCORP, INC.
The undersigned hereby irrevocably elects to exercise _________________ whole
Class B Rights represented by the attached Rights Certificate to purchase the
shares of Series B Junior Participating Preferred Stock issuable upon the
exercise of such Class B Rights and requests that certificates for such shares
be issued in the name of:
--------------------------------------------
Address:
------------------------------------
Social Security or other Taxpayer
Identification Number:
----------------------
If such number of Class B Rights shall not be all the Class B Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Class B Rights shall be registered in the name of and delivered to:
--------------------------------------------
Address:
------------------------------------
Social Security or other Taxpayer
Identification Number:
----------------------
Dated:____________________, ___.
Signature Guaranteed:
------------------------------------
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Class B
Rights and shares of Class B Common Stock, that the Class B Rights evidenced by
this Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial owner of the
Class B Rights evidenced by the enclosed Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Class B
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
30
EXHIBIT B
ARTICLES OF AMENDMENT
OF
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
RISCORP, INC.
The name of the corporation is: RISCORP, Inc., a Florida corporation
(hereinafter called the "Corporation"), which hereby certifies as follows:
FIRST: The Amended and Restated Articles of Incorporation of the
Corporation authorize the issuance of Ten Million (10,000,000) shares of
Preferred Stock, par value $.01 per share ("Preferred Stock"), and further
authorize the Board of Directors of the Corporation (the "Board of Directors"),
to establish one or more series of Preferred Stock and to establish the
designation of each such series and the variation in rights, preferences and
limitations for each such series.
SECOND: In accordance with the foregoing, Article IV of the Amended and
Restated Articles of Incorporation is hereby amended by adding the following
paragraphs H. and I. at the end thereof:
H. Series A Junior Participating Preferred Stock. There is
hereby established a series of Preferred Stock, par value $0.01 per share, of
the Corporation, and the designation and certain terms, powers, preferences and
other rights of the shares of such series, and certain qualifications,
limitations and restrictions thereon, are hereby fixed as follows:
(1) The distinctive serial designation of this series
shall be "Series A Junior Participating Preferred Stock" (hereinafter called
"this Series A"). Each share of this Series A shall be identical in all respects
with the other shares of this Series A except as to the dates from and after
which dividends thereon shall be cumulative.
(2) The number of shares in this Series A shall initially
be 200,000, which number may from time to time be increased or decreased (but
not below the number then outstanding) by the Board of Directors. Shares of this
Series A purchased by the Corporation shall be canceled and shall revert to
authorized but unissued shares of Preferred Stock undesignated as to series.
Shares of this Series A may be issued in fractional shares, which fractional
shares shall entitle the holder, in proportion to such holder's fractional
share, to all rights of a holder of a whole share of this Series A.
(3) The holders of full or fractional shares of this
Series A shall be entitled to receive, when and as declared by the Board of
Directors, but only out of funds legally available therefor, dividends, (A) on
each date that dividends or other distributions payable in Class A Common Stock
of the Corporation are payable on or in respect of Class A Common Stock
comprising part of the Series A Reference Package (as defined below), in an
amount per whole share of this Series A equal to the aggregate amount of
dividends or other distributions (other than dividends or distributions payable
in Class A Common Stock of the Corporation) that would be payable on such date
to a holder of the Series A Reference Package and (B) on the last day of March,
June, September and December in each year, in an amount per whole share of this
Series A equal to the excess (if any) of $1.00 over the aggregate dividends paid
per whole share of this Series A during the three-month period ending on such
last day. Each such dividend shall be paid to the holders of record of shares of
this Series A on the date, not exceeding sixty days preceding such dividend or
distribution payment date, fixed for that purpose by the Board of Directors in
advance of payment of each particular dividend or distribution. Dividends on
each full and each fractional share of this Series A shall be cumulative from
the date such full or fractional share is originally issued; provided that any
such full or fractional share originally issued after a dividend record date and
on or prior to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend payment date or
any amount in respect of the period from such original issuance to such dividend
payment date.
31
The term "Series A Reference Package" shall initially
mean 1000 shares of Class A Common Stock, par value $0.01 per share ("Class A
Common Stock"), of the Corporation. In the event the Corporation shall at any
time (A) declare or pay a dividend on any Class A Common payable in Class A
Common Stock, (B) subdivide any Class A Common or (C) combine any Class A Common
Stock into a smaller number of shares, then and in each such case the Series A
Reference Package after such event shall be the Class A Common that a holder of
the Series A Reference Package immediately prior to such event would hold
thereafter as a result thereof.
Holders of shares of this Series A shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on this Series A.
So long as any shares of this Series A are outstanding,
no dividend (other than a dividend in Class A Common Stock or in any other stock
ranking junior to this Series A as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution declared or made
upon the Class A Common Stock or upon any other stock ranking junior to this
Series A as to dividends or upon liquidation, nor shall any Class A Common Stock
nor any other stock of the Corporation ranking junior to or on a parity with
this Series A as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series A as to dividends and upon
liquidation), unless, in each case, the full cumulative dividends (including the
dividend to be due upon payment of such dividend, distribution, redemption,
purchase or other acquisition) on all outstanding shares of this Series A shall
have been, or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of Class A Common
Stock are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case the shares of this Series A shall at
the same time be similarly exchanged or changed in an amount per whole share
equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, that a holder of the Series A
Reference Package would be entitled to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
the holders of full and fractional shares of this Series A shall be entitled,
before any distribution or payment is made on any date to the holders of the
Class A Common Stock or any other stock of the Corporation ranking junior to
this Series A upon liquidation, to be paid in full an amount per whole share of
this Series A equal to the greater of (A) $1.00 or (B) the aggregate amount
distributed or to be distributed prior to such date in connection with such
liquidation, dissolution or winding up to a holder of the Series A Reference
Package (such greater amount being hereinafter referred to as the "Series A
Liquidation Preference"), together with accrued dividends to such distribution
or payment date, whether or not earned or declared. If such payment shall have
been made in full to all holders of shares of this Series A, the holders of
shares of this Series A as such shall have no right or claim to any of the
remaining assets of the Corporation.
In the event the assets of the Corporation available
for distribution to the holders of shares of this Series A upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to the first paragraph of this Section (v), no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series A upon
such liquidation, dissolution or winding up unless proportionate distributive
amounts shall be paid on account of the shares of this Series A, ratably in
proportion to the full distributable, amounts for which holders of all such
parity shares are respectively entitled upon such liquidation, dissolution or
winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series A then outstanding shall be
entitled to be paid out of assets of the Corporation available for distribution
to its stockholders all amounts to which such holders are entitled pursuant to
the first paragraph of this Section (v) before any payment shall be made to the
holders of Class A Common Stock or any other stock of the Corporation ranking
junior upon liquidation to this Series A.
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32
For the purposes of this Section (v), the consolidation
or merger of, or binding share exchange by, the Corporation with any other
corporation shall not be deemed to constitute a liquidation, dissolution or
winding up of the corporation.
(vi) The shares of this Series A shall not be redeemable.
(vii) In addition to any other vote or consent of
stockholders required by law or by the Certificate of Incorporation, as amended,
of the Corporation, each whole share of this Series A shall, on any matter, vote
as a class with any other capital stock comprising part of the Series A
Reference Package and voting on such matter and shall have the number of votes
thereon that a holder of the Series A Reference Package would have.
I. Series B Participating Preferred Stock. There is hereby
established a series of Preferred Stock, par value $0.01 per share, of the
Corporation, and the designation and certain terms, powers, preferences and
other rights of the shares of such series, and certain qualifications,
limitations and restrictions thereon, are hereby fixed as follows:
(1) The distinctive serial designation of this series
shall be "Series B Junior Participating Preferred Stock" (hereinafter called
"this Series B"). Each share of this Series B shall be identical in all respects
with the other shares of this Series B except as to the dates from and after
which dividends thereon shall be cumulative.
(2) The number of shares in this Series B shall initially
be 200,000, which number may from time to time be increased or decreased (but
not below the number then outstanding) by the Board of Directors. Shares of this
Series B purchased by the Corporation shall be canceled and shall revert to
authorized but unissued shares of Preferred Stock undesignated as to series.
Shares of this Series B may be issued in fractional shares, which fractional
shares shall entitle the holder, in proportion to such holder's fractional
share, to all rights of a holder of a whole share of this Series B.
(3) The holders of full or fractional shares of this
Series B shall be entitled to receive, when and as declared by the Board of
Directors, but only out of funds legally available therefor, dividends, (A) on
each date that dividends or other distributions payable in Class B Common Stock
of the Corporation are payable on or in respect of Class B Common Stock
comprising part of the Series B Reference Package (as defined below), in an
amount per whole share of this Series B equal to the aggregate amount of
dividends or other distributions (other than dividends or distributions payable
in Class B Common Stock of the Corporation) that would be payable on such date
to a holder of the Series B Reference Package and (B) on the last day of March,
June, September and December in each year, in an amount per whole share of this
Series B equal to the excess (if any) of $1.00 over the aggregate dividends paid
per whole share of this Series B during the three-month period ending on such
last day. Each such dividend shall be paid to the holders of record of shares of
this Series B on the date, not exceeding sixty days preceding such dividend or
distribution payment date, fixed for that purpose by the Board of Directors in
advance of payment of each particular dividend or distribution. Dividends on
each full and each fractional share of this Series B shall be cumulative from
the date such full or fractional share is originally issued; provided that any
such full or fractional share originally issued after a dividend record date and
on or prior to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend payment date or
any amount in respect of the period from such original issuance to such dividend
payment date.
The term "Series B Reference Package" shall initially
mean 1000 shares of Class B Common Stock, par value $0.01 per share ("Class B
Common Stock"), of the Corporation. In the event the Corporation shall at any
time (A) declare or pay a dividend on any Class B Common payable in Class B
Common Stock, (B) subdivide any Class B Common Stock or (C) combine any Class B
Common Stock into a smaller number of shares, then and in each such case the
Series B Reference Package after such event shall be the Class B Common Stock
that a holder of the Series B Reference Package immediately prior to such event
would hold thereafter as a result thereof.
Holders of shares of this Series B shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on this Series B.
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33
So long as any shares of this Series B are outstanding,
no dividend (other than a dividend in Class B Common Stock or in any other stock
ranking junior to this Series B as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution declared or made
upon the Class B Common Stock or upon any other stock ranking junior to this
Series B as to dividends or upon liquidation, nor shall any Class B Common Stock
nor any other stock of the Corporation ranking junior to or on a parity with
this Series B as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series B as to dividends and upon
liquidation), unless, in each case, the full cumulative dividends (including the
dividend to be due upon payment of such dividend, distribution, redemption,
purchase or other acquisition) on all outstanding shares of this Series shall
have been, or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of Class B Common
Stock are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case the shares of this Series B shall at
the same time be similarly exchanged or changed in an amount per whole share
equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, that a holder of the Series B
Reference Package would be entitled to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
the holders of full and fractional shares of this Series B shall be entitled,
before any distribution or payment is made on any date to the holders of the
Class B Common Stock or any other stock of the Corporation ranking junior to
this Series B upon liquidation, to be paid in full an amount per whole share of
this Series B equal to the greater of (A) $1.00 or (B) the aggregate amount
distributed or to be distributed prior to such date in connection with such
liquidation, dissolution or winding up to a holder of the Series B Reference
Package (such greater amount being hereinafter referred to as the "Series B
Liquidation Preference"), together with accrued dividends to such distribution
or payment date, whether or not earned or declared. If such payment shall have
been made in full to all holders of shares of this Series B, the holders of
shares of this Series B as such shall have no right or claim to any of the
remaining assets of the Corporation.
In the event the assets of the Corporation available for
distribution to the holders of shares of this Series B upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to the first paragraph of this Section (v), no such
distribution shall be made on account of any shares of any other class or series
of Preferred Stock ranking on a parity with the shares of this Series B upon
such liquidation, dissolution or winding up unless proportionate distributive
amounts shall be paid on account of the shares of this Series B, ratably in
proportion to the full distributable, amounts for which holders of all such
parity shares are respectively entitled upon such liquidation, dissolution or
winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series B then outstanding shall be
entitled to be paid out of assets of the Corporation available for distribution
to its stockholders all amounts to which such holders are entitled pursuant to
the first paragraph of this Section (v) before any payment shall be made to the
holders of Class B Common Stock or any other stock of the Corporation ranking
junior upon liquidation to this Series B.
For the purposes of this Section (v), the consolidation
or merger of, or binding share exchange by, the Corporation with any other
corporation shall not be deemed to constitute a liquidation, dissolution or
winding up of the corporation.
(vi) The shares of this Series B shall not be redeemable.
(vii) In addition to any other vote or consent of
stockholders required by law or by the Certificate of Incorporation, as amended,
of the Corporation, each whole share of this Series B shall, on any matter, vote
as a class with any other capital stock comprising part of the Series B
Reference Package and voting on such matter and shall have the number of votes
thereon that a holder of the Series B Reference Package would have.
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34
THIRD: The date of the foregoing amendments' adoption was May 13, 1999.
FOURTH: The foregoing amendment did not require stockholder approval.
The foregoing amendment was duly approved by the Board of Directors of the
corporation on May 13, 1999.
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