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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of Earliest Event Reported) - February 1, 2000
---------------
CAREMARK RX, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27276 63-1151076
(State or other jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
3000 Galleria Tower
Suite 1000
Birmingham, Alabama 35244
(Address of principal executive offices) (Zip Code)
(205) 733-8996
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
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Item 5. Other Events.
On March 1, 1995, the Board of Directors of the predecessor of Caremark
Rx, Inc. (the "Company") declared a dividend, which was subsequently paid, of
one preferred share purchase right (an "Original Right") for each outstanding
share of common stock, par value $.001 per share (the "Common Shares"). The
Original Rights were subsequently amended and, on February 1, 2000, the Original
Rights were amended and restated in their entirety to represent a right (the
"Rights") to purchase from the Company one one-hundredth of a share of Series C
Junior Participating Preferred Stock of the Company, par value $.001 per share
(the "Preferred Shares"), at a price of $52.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in an Amended and Restated Rights
Agreement (the "Rights Agreement"), including exhibits, between the Company and
First Chicago Trust Company Bank of New York as Rights Agent (the "Rights
Agent") which is filed as an exhibit to this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
Following is the Index of Exhibits furnished in accordance
with Item 601 of Regulation S-K, filed as part of this Current Report on Form
8-K:
4.1 Amended and Restated Rights Agreement, dated as of
February 1, 2000 between Caremark Rx, Inc. and First
Chicago Trust Company of New York.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
CAREMARK RX, INC.
By: /s/ Howard A. McLure
--------------------------------
Howard A. McLure
Senior Vice President
and Chief Accounting Officer
Dated: February 4, 2000
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Rights Agreement, dated
as of February 1, 2000 between Caremark Rx,
Inc. and First Chicago Trust Company of New
York.
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Exhibit 4.1
- --------------------------------------------------------------------------------
CAREMARK RX, INC.
And
FIRST CHICAGO TRUST COMPANY OF NEW YORK
As Rights Agent
---------------
Amended and Restated Rights Agreement
Dated as of February 1, 2000
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Certain Definitions.......................................................................1
Section 2. Appointment of Rights Agent...............................................................4
Section 3. Issue of Right Certificates...............................................................5
Section 4. Form of Right Certificates................................................................6
Section 5. Countersignature and Registration.........................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates...................................7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............................8
Section 8. Cancellation and Destruction of Right Certificates........................................8
Section 9. Availability of Preferred Shares..........................................................9
Section 10. Preferred Shares Record Date..............................................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.......................10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...............................16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.....................16
Section 14. Fractional Rights and Fractional Shares..................................................17
Section 15. Rights of Action.........................................................................18
Section 16. Agreement of Right Holders...............................................................19
Section 17. Right Certificate Holder Not Deemed a Stockholder........................................19
Section 18. Concerning the Rights Agent..............................................................19
Section 19. Merger or Consolidation or Change of Name of Rights Agent................................20
Section 20. Duties of Rights Agent...................................................................20
Section 21. Change of Rights Agent...................................................................22
Section 22. Issuance of New Right Certificates.......................................................23
Section 23. Redemption...............................................................................23
Section 24. Exchange.................................................................................24
Section 25. Notice of Certain Events.................................................................25
Section 26. Notices..................................................................................26
Section 27. Supplements and Amendments...............................................................26
Section 28. Successors...............................................................................27
Section 29. Benefits of this Rights Agreement........................................................27
Section 30. Severability.............................................................................27
Section 31. Governing Law............................................................................27
Section 32. Counterparts.............................................................................27
Section 33. Descriptive Headings.....................................................................27
</TABLE>
Exhibit A - Third Restated Certificate of Incorporation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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AMENDED AND RESTATED RIGHTS AGREEMENT
Amended and Restated Rights Agreement, dated as of February 1, 2000
("Rights Agreement"), between CAREMARK RX, INC., a Delaware corporation formerly
known as MedPartners, Inc. (the "Company"), and FIRST CHICAGO TRUST COMPANY OF
NEW YORK (the "Rights Agent").
Whereas, as of March 1, 1995, the Company's predecessor and Chemical
Bank, as Rights Agent, entered into a Rights Agreement (the "Original Rights
Agreement"). In connection, therewith, the Board of Directors of the Company
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share of the Company outstanding on the Record Date (as
defined in the Original Rights Agreement"), each Right representing the right to
purchase one one-hundredth of a Preferred Share, upon the terms and subject to
the conditions therein set forth, and further authorized and directed the
issuance of one Right with respect to each Common Share that became outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Expiration Date;
Whereas, as of November 29, 1995, the Original Rights Agreement was
amended to substitute under the Original Rights Agreement the Company (then
known as MedPartners/Mullikin, Inc., subsequently known as MedPartners, Inc. and
now known as Caremark Rx, Inc.) for the Company's predecessor;
Whereas, as of September 5, 1996, the Original Rights Agreement was
further amended to substitute First Chicago Trust Company of New York as Rights
Agent;
Whereas, the Company wishes to further amend the Original Rights
Agreement, together with the Exhibits thereto, and to restate the terms of the
Original Rights Agreement, as heretofore amended, and such Exhibits, in the form
of this Amended and Restated Rights Agreement and Exhibits A, B and C hereto.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares then outstanding, but shall
not include (i) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan, (ii) any Person who
or which becomes the Beneficial Owner of 20% or more of the Common Shares then
outstanding as the result of a reduction in the outstanding Common Shares
resulting from acquisition of Common Shares by the Company approved by the Board
of Directors, unless and until such Person becomes the
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Beneficial Owner of any additional Common Shares, other than pursuant to a stock
dividend or stock split, (iii) any Person who or which the Board of Directors of
the Company determines, in good faith, became an Acquiring Person inadvertently,
if such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, or (iv) any
Person who or which the Board of Directors of the Company determines, prior to
the time such Person would otherwise be an Acquiring Person, should be exempted
from the definition of Acquiring Person, provided that the Board of Directors
may make such exemption subject to such conditions, if any, which the Board may
determine.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange or (B) the right to vote pursuant to any agreement,
arrangement or understanding, provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report) or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any securities of the Company.
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Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to Beneficially Own hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean
5:00 p.m., New York City time, on such date, provided, however, that, if such
date is not a Business Day, it shall mean 5:00 p.m., New York City time, on the
next succeeding Business Day.
(f) "Common Shares" shall mean the shares of common stock, par
value $.001 per share, of the Company, except that "Common Shares" when used
with reference to any Person other than the Company shall mean the capital stock
(or equity interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Company" shall have the meaning set forth in the preamble
hereof.
(h) "Current per share market price" shall have the meaning
set forth in Section 11(d) hereof.
(i) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(j) "Equivalent preferred shares" shall have the meaning set
forth in Section 11(b) hereof.
(k) "Exchange Act" shall mean the Securities Exchange Act of
1934.
(l) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(m) "Expiration Date" shall mean the Close of Business on
February 28, 2005.
(n) "Nasdaq" shall mean the Nasdaq Stock Market.
(o) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
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(p) "Preferred Shares" shall mean shares of Series C Junior
Participating Preferred Stock, $.001 par value, of the Company having the rights
and preferences set forth in Section 4.2 of the Company's Third Restated
Certificate of Incorporation attached to this Rights Agreement as Exhibit A.
(q) "Purchase Price" shall initially be $52.00 for each one
one-hundredth of a Preferred Share purchasable pursuant to the exercise of a
Right, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof.
(r) "Record Date" shall have the meaning set forth in the
second paragraph hereof.
(s) "Redemption Date" shall mean the time at which the Rights
are redeemed as provided in Section 23 hereof.
(t) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(u) "Right" shall have the meaning set forth in the second
paragraph hereof.
(v) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(w) "Rights Agent" shall have the meaning set forth in the
preamble hereof.
(x) "Security" shall have the meaning set forth in Section
11(d)(i) hereof.
(aa) "Stock Acquisition Date" shall mean the first date of
public announcement (including, without limitation, by a filing under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the Board shall become aware
of the existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned or otherwise controlled, directly or
indirectly, by such Person.
(cc) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders
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of the Common Shares) in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of the
Close of Business on (i) the tenth day after the Stock Acquisition Date or (ii)
such date, if any, as may be determined by action of the Board of Directors of
the Company after the date of the commencement by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) of, or of the first public announcement
of the intention of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring Person (including any such date
which is after the date of this Rights Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) The Company will make available, as promptly as
practicable following the Record Date, a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto, to any holder of Rights
who may so request from time to time prior to the Expiration Date. With respect
to certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates and the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Expiration Date), the surrender for transfer of any
certificate for Common Shares in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such Common Shares.
(c) Rights shall be issued in respect of all Common Shares
which are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date. Certificates representing such Common
Shares shall bear the following legend:
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This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Caremark
Rx, Inc. (the "Company") and the Rights Agent thereunder (the
"Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, rights issued
to any person who becomes an Acquiring Person (as defined in the
rights agreement), including such rights held by a subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage. Subject to the provisions of Sections 11 and 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein, but the
number of one one-hundredths of a Preferred Share and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the
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Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or the Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will
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make and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein), in
whole or in part, at any time after the Distribution Date, upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the Rights
Agent, together with payment of the Purchase Price for each one one-hundredth of
a Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Expiration Date, (ii) the Redemption Date or (iii) the time
at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes any such transfer
agent to comply with all such requests, or (B) requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent of the Preferred Shares with such depositary agent) and the Company hereby
directs such depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof; (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or
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exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and, in such
case, shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(b) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.
(c) The Company will use its best efforts to ensure that any
securities issued pursuant hereto are issued in compliance with all applicable
laws.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares
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on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement, in
the event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Rights Agreement and in lieu of Preferred Shares, such number
of Common Shares as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.
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<PAGE> 13
Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of such event, any Rights that are or were acquired or
Beneficially Owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Rights Agreement. No Right Certificate shall be issued pursuant to Section 3
that represents Rights Beneficially Owned by an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be cancelled.
(iii) If there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. If the Company shall,
after good faith effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall substitute, for
each Common Share that would otherwise be issuable upon exercise of a Right, a
number of Preferred Shares or fraction thereof (or a security with substantially
similar rights, privileges, preferences, voting power and economic rights) such
that the current per share market price of one Preferred Share (or such other
security) multiplied by such number or fraction is equal to the current per
share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof (or other security).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the
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<PAGE> 14
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days immediately prior to such date; provided, however, that in the event that
the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per
12
<PAGE> 15
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq or such other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of Directors of
the Company shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-millionth of
a Preferred Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
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<PAGE> 16
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one millionth
of a Preferred Share) obtained by (A) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one millionth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders
14
<PAGE> 17
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that, it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares at less than
the current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Rights Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in Common Shares or
(ii) effect a subdivision, combination
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<PAGE> 18
or consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that
(i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Rights Agreement and in lieu
of Preferred Shares, such number of Common Shares of such other Person
(including the Company as successor thereto or as the surviving corporation) as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such other Person (determined
pursuant to
16
<PAGE> 19
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer;
(ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Rights Agreement;
(iii) the term "Company" shall thereafter be deemed
to refer to such issuer; and
(iv) such issuer shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights.
The Company shall not consummate any such consolidation, merger, sale
or transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use or, if on any
17
<PAGE> 20
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as Beneficial Owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as expressly provided above).
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, 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 the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
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 Rights 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 Rights Agreement.
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<PAGE> 21
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) 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 Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
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<PAGE> 22
(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 Rights Agreement in reliance upon
any Right Certificate or certificate for the Preferred Shares or Common Shares
or 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, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. 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 shall be a party, or any corporation
succeeding to the stock transfer or corporate trust powers of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights 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 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete
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<PAGE> 23
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such 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 Rights Agreement.
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<PAGE> 24
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniary 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 Rights 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 shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30-days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30-days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who or which shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York, in good standing,
having an office in the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
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<PAGE> 25
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors of the Company to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock combination, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors of
the Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company, in its sole discretion, may
establish. The Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the current market price at the time of redemption) or
any other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
of the Company ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given,
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<PAGE> 26
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of Common Shares prior to the Distribution
Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof (or a security with
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<PAGE> 27
substantially similar rights, privileges, preferences, voting power and economic
rights) such that the current per share market price of one Preferred Share (or
other such security) multiplied by such number or fraction is equal to the
current per share market price of one Common Share as of the date of issuance of
such Preferred Shares or fraction thereof (or other such security).
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company, at any
time after the Distribution Date, shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right
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<PAGE> 28
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Caremark Rx, Inc.
3000 Galleria Tower
Suite 1000
Birmingham, Alabama 35244
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite No. 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Rights Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Board of Directors of the
Company may from time to time supplement or amend this Rights Agreement without
the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Board of Directors of the
Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent, provided,
however, after any Person becomes an Acquiring Person, this Rights Agreement
shall not be amended in any manner which would adversely affect the interests of
the holders of Rights (other than an Acquiring Person or Affiliate or Associate
thereof).
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Section 28. Successors. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any Person, other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
CAREMARK RX, INC.
By: /s/ E. M. CRAWFORD
------------------------------------
E. M. Crawford
Chief Executive Officer
FIRST CHICAGO TRUST COMPANY
of New York
By: /s/ MICHAEL S. DUNKAN
------------------------------------
Michael S. Dunkan
Director, Corporate Actions
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<PAGE> 31
EXHIBIT A
THIRD RESTATED CERTIFICATE OF INCORPORATION
OF
MEDPARTNERS, INC.
MEDPARTNERS, INC., a corporation organized and existing under and by
virtue of the Delaware General Corporation Law ("DGCL"), does hereby certify
that:
The present name of the corporation is MedPartners, Inc.
("Corporation");
The date of filing of the original Certificate of Incorporation of the
Corporation with the Delaware Secretary of State was August 14, 1995, under the
name MedPartners/Mullikin, Inc.;
The date of filing of the Restated Certificate of Incorporation of the
Corporation with the Delaware Secretary of State was November 29, 1995;
The date of filing of the Certificate of Correction of Restated
Certificate of Incorporation of the Corporation with the Delaware Secretary of
State was May 13, 1996;
The date of filing of the Second Amended and Restated Certificate of
Incorporation of the Corporation with the Delaware Secretary of State was May
13, 1996;
The date of filing of a Certificate of Amendment to Second Amended and
Restated Certificate of Incorporation of the Corporation with the Delaware
Secretary of State was September 5, 1996; and
The date of filing of a Certificate of Amendment to Second Amended and
Restated Certificate of Incorporation of the Corporation with the Delaware
Secretary of State was December 13, 1996.
The provisions of the Second Amended and Restated Certificate of
Incorporation, as previously amended, are hereby restated and integrated into
the single instrument which is hereinafter set forth, and which is entitled
Third Restated Certificate of Incorporation of MedPartners, Inc., without any
further amendment and without any discrepancy between the provisions of the
Second Amended and Restated Certificate of Incorporation, as previously amended,
and the provisions of the said single instrument hereinafter set forth.
The Board of Directors of the Corporation duly adopted this Third
Restated Certificate of Incorporation pursuant to the provisions of Section 245
of the DGCL in the form set forth as follows:
ARTICLE I
The name of the Corporation is MedPartners, Inc.
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ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Prentice-Hall Corporation System, Inc. at 1013 Centre Road, in
the City of Wilmington, County of New Castle. The Registered Agent in charge
thereof is The Prentice-Hall Corporation System, Inc.
ARTICLE III
The purposes of the Corporation are to engage in any lawful act or
activity for which corporations may be organized under the DGCL, including, but
not limited to, the following:
SECTION 3.1 To engage in any lawful act or activity for which
corporations may be organized under the DGCL;
SECTION 3.2 To manufacture, purchase or otherwise acquire, invest in,
own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description;
SECTION 3.3 To acquire, and pay for in cash, stock or bonds of this
Corporation or otherwise, the goodwill, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or liabilities of
any person, firm, association or corporation;
SECTION 3.4 To acquire, hold, use, sell, assign, lease, grant licenses
in respect of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, trademarks and trade names,
relating to or useful in connection with any business of this Corporation;
SECTION 3.5 To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares of the
capital stock, or any voting trust certificates in respect of the shares of
capital stock, scrip, warrants, rights, bonds, debentures, notes, trust
receipts, and other securities, obligations, choses in action and evidences of
indebtedness or interest issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government of the United States of America, or by any foreign
government, or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and as owner thereto to
possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof;
SECTION 3.6 To borrow or raise money for any of the purposes of the
Corporation and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon or pledge, conveyance or assignment in
trust of the whole or any part of the property of the Corporation, whether at
the time owned or thereafter acquired, and to sell, pledge or otherwise dispose
of such bonds or other obligations of
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<PAGE> 33
the Corporation for its corporate purposes;
SECTION 3.7 To purchase, receive, take by grant, gift, devise, bequest
or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest therein,
wherever situated, and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of the Corporation's property and
assets, or any interest therein, wherever situated; and
SECTION 3.8 In general, to possess and exercise all the powers and
privileges granted by the DGCL or by any other law of Delaware or by this
Certificate of Incorporation together with any powers incidental thereto, so far
as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the Corporation.
SECTION 3.9 The business and purposes specified in the foregoing
clauses shall, except where otherwise expressed, be in nowise limited or
restricted by reference to, or inference from, the terms of any other clause in
this Certificate of Incorporation, but the business and purposes specified in
each of the foregoing clauses of this Article shall be regarded as an
independent business and purpose.
ARTICLE IV
SECTION 4.1 AUTHORIZATION OF CAPITAL. The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is
Four Hundred Ten Million (410,000,000) shares, comprised of (a) Four Hundred
Million (400,000,000) shares of Common Stock, with a par value of $.001 per
share; (b) Five Hundred Thousand (500,000) shares of Series C Junior
Participating Preferred Stock (the "Series C Preferred Stock"), with a par value
of $.001 per share; and (c) Nine Million Five Hundred Thousand (9,500,000)
shares of such other Preferred Stock, with a par value of $.001 per share, as
the Board of Directors may decide to issue pursuant to Section 4.3, which
constitutes a total authorized capital of all classes of capital stock of Four
Hundred Ten Thousand Dollars ($410,000.00).
A description of the respective classes of stock and a statement of the
designations, preferences, voting powers, relative, participating, optional or
other special rights and privileges, and the qualifications, limitations and
restrictions of the Series C Preferred Stock, such other Preferred Stock as the
Board of Directors may by resolution or resolutions decide to issue, and the
Common Stock are as follows:
SECTION 4.2 SERIES C PREFERRED STOCK.
(a) Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(1) Subject to the provisions for adjustment
hereinafter set forth, each share of Series C Preferred Stock shall entitle the
holder thereof to one hundred (100) votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (as defined in subsection 4.2(b)) (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding
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Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series C Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by
law, the holders of shares of Series C Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(3) (A) If at any time dividends on any
Series C Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series C Preferred Stock then outstanding shall have been declared and paid or
set apart for payment. During each default period, all holders of Preferred
Stock (including holders of the Series C Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon, voting as a
class irrespective of series, shall have the right to elect two (2) Directors.
(B) During any default period, such
voting right of the holders of Series C Preferred Stock may be exercised
initially at a special meeting called pursuant to subsection 4.2(a)(3)(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Series C Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Series C Preferred Stock of such voting right. At any meeting at which the
holders of Series C Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Series C Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the election
by them of the required number. After the holders of the Series C Preferred
Stock shall have exercised their right to elect Directors in any default period
and during the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Series C Preferred Stock
as herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series C Preferred Stock.
(C) Unless the holders of Series C
Preferred Stock shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of Directors may order, or
any stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series C Preferred Stock
outstanding, irrespective of series, may request, the calling of a special
meeting of the holders of Series C
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Preferred Stock, which meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Corporation. Notice of such meeting and
of any special meeting at which holders of Series C Preferred Stock are entitled
to vote pursuant to this subsection 4.2(a)(3)(C) shall be given to each holder
of record of Series C Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than twenty (20) days and not
later than sixty (60) days after such order or request or, in default of the
calling of such meeting within sixty (60) days after such order or request, such
meeting may be called on similar notice by any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions of this
subsection 4.2(a)(3)(C), no such special meeting shall be called during the
period within sixty (60) days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(D) In any default period, the holders
of Common Stock, and other classes of stock of the Corporation, if applicable,
shall continue to be entitled to elect the whole number of Directors until the
holders of Series C Preferred Stock shall have exercised their right to elect
two (2) Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Series C Preferred Stock shall continue
in office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in subsection 4.2(a)(3)(B) hereof) be filled
by vote of a majority of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director whose office shall have
become vacant. References in this Section 4.2(a)(3)(D) to Directors elected by
the holders of a particular class of stock shall include Directors elected by
such Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(E) Immediately upon the expiration of
a default period, (x) the right of the holders of Series C Preferred Stock as a
class to elect Directors shall cease, (y) the term of any Directors elected by
the holders of Series C Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in this
Certificate of Incorporation or the Bylaws of the Corporation, irrespective of
any increase made pursuant to the provisions of subsection 4.2(a)(3)(B) hereof
(such number being subject, however, to change thereafter in any manner provided
by law or in the Certificate of Incorporation or Bylaws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(4) Except as set forth herein, holders of
Series C Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
(b) Dividends and Distributions.
(1) The holders of shares of Series C Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purposes, quarterly dividends
payable in cash on the last day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series C Preferred Stock, in an
amount per share
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(rounded to the nearest cent) equal to the greater of (a) $.001 or (b) subject
to the provision for adjustment hereinafter set forth, one hundred (100) times
the aggregate per share amount of all cash dividends, and one hundred (100)
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series C Preferred Stock. In the event the Corporation shall, at any
time after November 10, 1994 (the "Rights Declaration Date"), (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series C Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(2) The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as provided in subsection 4.2(b)(1)
hereof immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.001 per share on the
Series C Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(3) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series C Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
C Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
C Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series C Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series C Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than thirty (30) days prior to the date fixed for the payment thereof.
(c) Restrictions.
(1) Whenever quarterly dividends or other
dividends or distributions payable on the Series C Preferred Stock as provided
in subsection 4.2(b) hereof are in arrears, thereafter
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and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(A) declare or pay dividends on, make
any other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock;
(B) declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, except dividends paid ratably on the Series C Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(C) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series C Preferred Stock; or
(D) purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock, or any shares of stock
ranking on a parity with the Series C Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(2) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation could, under
subsection 4.2(c)(1) hereof, purchase or otherwise acquire such shares at such
time and in such manner.
(d) Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall, upon their cancellation, become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
(e) Liquidation, Dissolution or Winding Up.
(1) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series C Preferred Stock
unless, prior thereto, the holders of shares of Series C Preferred Stock shall
have received an amount equal to one hundred (100) times the Exercise Price,
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such
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payment (the "Series C Liquidation Preference"). The term "Exercise Price" means
the price established by the Board of Directors for the purchase of one unit of
Series C Preferred Stock equal to one-one-hundredth of one share of Series C
Preferred Stock. If no shares of convertible Preferred Stock are outstanding at
the time of liquidation, then, following the payment of the full amount of the
Series C Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series C Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series C
Liquidation Preference by (ii) one hundred (100) (as approximately adjusted as
set forth in subparagraph (3) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series C Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series C Preferred Stock and Common Stock,
respectively, holders of Series C Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to one
(1) with respect to such Series C Preferred Stock and Common Stock, on a per
share basis, respectively.
(2) In the event, however, that there are not
sufficient assets available to permit payment in full of the Series C
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series C Preferred
Stock, then such remaining assets shall be distributed ratable to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(3) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then, in each such case, the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(f) Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then, in any such case, the
shares of Series C Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to one hundred (100) times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then, in each such
case, the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
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number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(g) No Redemption. The shares of Series C Preferred Stock
shall not be redeemable.
(h) Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series C
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series C
Preferred Stock, voting separately as a class.
(i) Fractional Shares. Series C Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, to receive
dividends, to participate in distributions and to have the benefit of all other
rights of holders of Series C Preferred Stock.
SECTION 4.3 OTHER PREFERRED STOCK. The Board of Directors of the
Corporation is authorized, subject to the limitations prescribed by law and the
provisions of this Section 4.3, to adopt one or more resolutions to provide for
the issuance from time to time in one or more series of any number of shares of
Preferred Stock, up to a maximum of nine million five hundred thousand
(9,500,000) shares, and to establish the number of shares to be included in each
such series, and to fix the designation, relative rights, preferences,
qualifications and limitations of the shares of each such series. The authority
of the Board of Directors with respect to each such series shall include, but
not be limited to, a determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series,
whether dividends shall be cumulative and, if so, from which date or dates, and
whether they should be payable in preference to, or in another relation to, the
dividends payable on any other class or classes or series of stock;
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion or exchange
privileges and, if so, the terms and conditions of such conversion or exchange,
including provision for adjustments for the conversion or exchange rate in such
events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable and, if so, the terms and conditions of such redemption, including
the manner of selecting shares for redemption if less than all shares are to be
redeemed, the date or dates upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
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(f) Whether that series shall be entitled to the benefit
of a sinking fund to be applied to the purchase or redemption of shares of that
series and, if so, the terms and amounts of such sinking funds;
(g) The rights of the shares of that series to the
benefit of conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issuance of any additional stock
(including additional shares of such series or of any other series) and upon the
payment of dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Corporation or any subsidiary of, any
outstanding stock of the Corporation;
(h) The right of the shares of that series in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in other
relation to, the comparable rights of any other class or classes or series of
stock; and
(i) Any other relative, participating, optional or other
special rights, qualifications, limitations or restrictions of that series.
SECTION 4.4 COMMON STOCK.
(a) Voting Rights. Except as otherwise required by law or
this Certificate of Incorporation, each holder of Common Stock shall have one
vote in respect of each share of stock held by him of record on the books of the
Corporation for the election of Directors and on all matters submitted to a vote
of stockholders of the Corporation.
(b) Dividends. Except as otherwise provided by the
resolution or resolutions of the Board of Directors providing for the issuance
of any series of Preferred Stock pursuant to Section 4.3, the holders of shares
of Common Stock shall be entitled to receive, when and if declared by the Board
of Directors, out of the assets of the Corporation which are by law available
therefor, dividends payable either in cash, in property or in shares of capital
stock.
(c) Dissolution, Liquidation or Winding Up. Except as
otherwise provided by the resolution or resolutions of the Board of Directors
providing for the issuance of any series of Preferred Stock pursuant to Section
4.3, in the event of any dissolution, liquidation or winding up of the affairs
of the Corporation, after distribution in full of the preferential amounts, if
any, to be distributed to the holders of the Series C Preferred Stock, the
rights of the holders of Common Stock to receive any remaining assets of the
Corporation shall be as provided in subsection 4.2(e).
ARTICLE V
SECTION 5.1 GENERAL PROVISIONS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. The
exact number of Directors shall be fixed from time to time by, or in the manner
provided in, the Bylaws of the Corporation, and may be increased or decreased as
therein provided. Directors of the Corporation need not be elected by ballot
unless required by the Bylaws.
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SECTION 5.2 CLASSIFICATION OF BOARD OF DIRECTORS. The Directors shall
be divided into three (3) classes. Each such class shall consist, as nearly as
may be possible, of one-third of the total number of Directors, and any
remaining Directors shall be included within such groups as the Board of
Directors shall designate. The first class of Directors will be elected for a
term which expires in 1996. The second class will be elected for a term which
expires in 1997. The third class will be elected to a term which expires in
1998. At each annual meeting of stockholders, beginning in 1996, successors to
the class of Directors whose term expires at the annual meeting shall be elected
for a three-year term. If the number of Directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
Directors in each class as nearly equal as possible, but in no case shall a
decrease in the number of Directors shorten the term of any incumbent Director.
A Director may be removed from office for cause only and, subject to such
removal, death, resignation, retirement or disqualification, shall hold office
until the annual meeting for the year in which his term expires and until his
successor shall be elected and qualify. No alteration, amendment or repeal of
this Article V or the Bylaws of the Corporation shall be effective to shorten
the term of any Director holding office at the time of such alteration,
amendment or repeal, to permit any such Director to be removed without cause, or
to increase the number of Directors in any class or in the aggregate from that
existing at the time of such alteration, amendment or repeal until the
expiration of the terms of office of all Directors then holding office, unless
(i) in the case of this Article V, such alteration, amendment or repeal has been
approved by the holders of all shares of stock entitled to vote thereon, or (ii)
in the case of the Bylaws, such alteration, amendment or repeal has been
approved by either the holders of all shares entitled to vote thereon or by a
vote of a majority of the entire Board of Directors.
SECTION 5.3 DIRECTORS APPOINTED BY A SPECIFIC CLASS OF STOCKHOLDERS. To
the extent that any holders of any class or series of stock other than Common
Stock issued by the Corporation shall have the separate right, voting as a class
or series, to elect Directors, the Directors elected by such class or series
shall be deemed to constitute an additional class of Directors and shall have a
term of office for one year or such other period as may be designated by the
provisions of such class or series providing such separate voting right to the
holders of such class or series of stock, and any such class of Directors shall
be in addition to the classes designated above.
SECTION 5.4 NOMINATIONS. Advance notice of nominations for the election
of Directors shall be given in the manner and to the extent provided in the
Bylaws of the Corporation.
SECTION 5.5 VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by a majority of the Board of Directors, and any vacancies on the Board of
Directors resulting from death, resignation, removal or other cause shall only
be filled by the affirmative vote of a majority of the remaining Directors then
in office, even though less than a quorum of the Board of Directors, or by a
sole remaining Director. Any Director elected in accordance with the preceding
sentence of this Section 5.5 shall hold office for the remainder of the full
term of the Directors whose vacancy is so filled and until such Director's
successor shall have been elected and qualified.
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ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
In furtherance and not in limitation of the powers conferred upon it by
law, the Board of Directors is expressly authorized:
SECTION 7.1 To adopt, repeal, alter or amend the Bylaws of the
Corporation by a vote of a majority of the entire Board of Directors.
SECTION 7.2 To authorize and cause to be executed mortgages and liens
upon the real and personal property of the Corporation.
SECTION 7.3 To set apart, out of any of the funds of the Corporation
available for dividends, a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
SECTION 7.4 By a majority of the whole Board of Directors, to designate
one or more committees, each committee to consist of one or more of the
Directors of the Corporation. The Board of Directors may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The Bylaws may provide
that, in the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, or in the Bylaws of the Corporation, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to amending
the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation; and, unless the
resolution or Bylaws expressly so provide, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
SECTION 7.5 When and as authorized by the stockholders in accordance
with statute, to sell, lease or exchange all or substantially all of the
property and assets of the Corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such consideration, which may
consist in whole or in part of money or property, including shares of stock in
and/or other securities of any other corporation or corporations, as the Board
of Directors shall deem expedient and for the best interests of the Corporation.
ARTICLE VIII
SECTION 8.1 Except as provided in Section 8.2 of this Article VIII, any
action required or permitted to be taken by the stockholders of the Corporation
must be effected at a duly called
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annual or special meeting of the stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders. Advance notice of items
of business to be considered at any meeting of the stockholders shall be given
in the manner and to the extent provided in the Bylaws of the Corporation.
SECTION 8.2 Notwithstanding the foregoing, this Article VIII shall not
apply to the Corporation if it does not have a class of voting stock that is
either (i) listed on a national securities exchange, (ii) authorized for
quotation on an inter dealer quotation system of the registered national
securities association, or (iii) held of record by more than two thousand
(2,000) stockholders.
ARTICLE IX
SECTION 9.1 LIMITATION OF LIABILITY OF DIRECTORS. A Director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the Director
derived an improper personal benefit.
If the DGCL is amended after the date hereof to authorized
action by corporations organized pursuant to the DGCL to further eliminate or
limit the personal liability of directors, then the liability of a Director of
the Corporation shall be eliminated or limited to the fullest extent permitted
by the DGCL, as amended.
SECTION 9.2 INDEMNIFICATION OF DIRECTORS.
(a) Each person who was or is made a party to, or is
threatened to be made a party to, or is involved in, any threatened, pending or
completed action, suit or proceeding, whether formal or informal, whether of a
civil, criminal, administrative or investigative nature (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a Director of the Corporation,
whether the basis of such proceeding is an alleged action or inaction in an
official capacity or in any other capacity while serving as a Director, shall be
indemnified and held harmless by the Corporation to the fullest extent
permissible under Delaware law, as the same exists or may hereafter exist in the
future (but, in the case of any future change, only to the extent that such
change permits the Corporation to provide broader indemnification rights than
the law permitted prior to such change), against all costs, charges, expenses,
liabilities and losses (including, without limitation, attorneys' fees,
judgments, fines, Employee Retirement Income Security Act of 1974 ("ERISA")
excise taxes, or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a Director
and shall inure to the benefit of his or her heirs, executors and
administrators.
(b) The Corporation shall pay expenses actually incurred
in connection with any proceeding in advance of its final disposition; provided,
however, that if Delaware law then requires, the payment of such expenses
incurred in advance of the final disposition of a
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proceeding shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such Director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such Director or officer
is not entitled to be indemnified.
(c) If a claim under subsection 9.2(a) hereof is not paid
in full by the Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination that indemnification of the claimant
is permissible in the circumstances because the claimant has met the applicable
standard of conduct, if any, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met the standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
standard of conduct.
SECTION 9.3 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS. The
Corporation may provide indemnification to employees and agents of the
Corporation to the fullest extent permissible under Delaware law.
SECTION 9.4 EXPENSES AS A WITNESS. To the extent that any Director,
officer, employee or agent of the Corporation is, by reason of such position, or
position with another entity at the request of the Corporation, a witness in any
action, suit or proceeding, he or she shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her on his or her behalf in
connection therewith.
SECTION 9.5 INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under Delaware law.
SECTION 9.6 INDEMNITY AGREEMENTS. The Corporation may enter into
agreements with any Director, officer, employee or agent of the Corporation
providing for indemnification to the fullest extent permissible under Delaware
law.
SECTION 9.7 SEPARABILITY. Each and every paragraph, sentence, term and
provision of this Article IX is separate and distinct, so that if any paragraph,
sentence, term or provision hereof shall be held to be invalid or unenforceable
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of any other paragraph, sentence, term or provision
hereof. To the extent required, any paragraph, sentence, term or provision of
this Article IX may be modified by a court of competent jurisdiction to preserve
its validity and to provide the claimant with, subject to the limitations set
forth in this Article IX and any agreement between the Corporation and claimant,
the broadest possible indemnification permitted under applicable law.
SECTION 9.8 CONTRACT RIGHT. Each of the rights conferred on Directors
of the Corporation by Sections 9.1, 9.2 and 9.4 of this Article IX, and on
officers, employees or agents
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<PAGE> 45
of the Corporation by Section 9.4 of this Article, shall be a contract right,
and any repeal or amendment of the provisions of this Article shall not
adversely affect any right hereunder of any person existing at the time of such
repeal or amendment with respect to any act or omission occurring prior to the
time of such repeal or amendment, and, further, shall not apply to any
proceeding, irrespective of when the proceeding is initiated, arising from the
service of such person prior to such repeal or amendment.
SECTION 9.9 NONEXCLUSIVITY. The rights conferred in this Article shall
not be exclusive of any other rights that any person may have or hereafter
acquire under any statute, Bylaw, agreement, vote of stockholders or
disinterested Directors or otherwise.
ARTICLE X
The Corporation reserves the right to amend, alter or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are subject to this reservation.
IN WITNESS WHEREOF, MedPartners, Inc. has caused this Certificate to be
signed by Harold O. Knight, Jr., its Executive Vice President and Chief
Financial Officer, and attested to by Tracy P. Thrasher, its Executive Vice
President and Corporate Secretary, this 24th day of March, 1997.
MEDPARTNERS, INC.
By: /s/Harold O. Knight, Jr.
------------------------
Harold O. Knight, Jr.
Executive Vice President and
Chief Financial Officer
ATTEST:
/s/ Tracy P. Thrasher
- --------------------------------
Tracy P. Thrasher
Its Secretary
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<PAGE> 46
EXHIBIT B
Form of Right Certificate
Certificate No. R-
_________ Rights
NOT EXERCISABLE AFTER FEBRUARY 28, 2005 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
Caremark Rx, Inc.
This certifies that __________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement, dated as of February 1, 2000 (the "Rights
Agreement"), between Caremark Rx, Inc., a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m., New York time, on
February 28, 2005 at the principal office of the Rights Agent, or at the office
of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series C Junior Participating Preferred Stock of the
Company, par value $.001 per share (the "Preferred Shares"), at a purchase price
of $52.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of February 1, 2000, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
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<PAGE> 47
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate (i) may be redeemed by the Company at a redemption
price of $.001 per Right or (ii) may be exchanged, in whole or in part, for
Preferred Shares or shares of the Company's Common Stock, par value $.001 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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<PAGE> 48
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of , 20 .
-------- --
CAREMARK RX, INC.
By:
---------------------
Name:
Title:
COUNTERSIGNED:
By:
-----------------------
Name:
Title:
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<PAGE> 49
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
----------------------------
Signature
------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
Certificate
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
----------------------------
Signature
------------------------
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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<PAGE> 50
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To:
------------------------
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number:_________________________________________________
- -----------------------------------------
(Please print name and address)
- ------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________________________
- ------------------------------------------
(Please print name and address)
- ------------------------------------------
Dated:
---------------------------------
Signature
------------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
B-5
<PAGE> 51
Certificate
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:
--------------------------------
Signature
-----------------------------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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<PAGE> 52
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On March 1, 1995, the Board of Directors of the predecessor of Caremark
Rx, Inc. (the "Company") declared a dividend, which was subsequently paid, of
one preferred share purchase right (an "Original Right") for each outstanding
share of common stock, par value $.001 per share (the "Common Shares"), of the
Company. The Original Rights were subsequently amended and, on February 1, 2000,
the Original Rights were amended and restated in their entirety to represent a
right (the "Rights") to purchase from the Company one one-hundredth of a share
of Series C Junior Participating Preferred Stock of the Company, par value $.001
per share (the "Preferred Shares"), at a price of $52.00 per one one-hundredth
of a Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in an Amended and Restated
Rights Agreement (the "Rights Agreement") between the Company and First Chicago
Trust Company Bank of New York as Rights Agent (the "Rights Agent").
Distribution Date; Exercisability
Initially, the Rights will be attached to all Common Share certificates
and no separate Rights certificates will be issued. Separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the earlier to occur of (i)
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) such date as may be determined by action of
the Board of Directors of the Company following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Shares (the earlier of such dates
being the "Distribution Date").
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 28, 2005 (the "Expiration Date"), unless the Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
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<PAGE> 53
Flip-In
If a person or group becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Preferred Shares or other similar securities of
the Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the existence of an Acquiring
Person, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
For example, at an exercise price of $50 per Right, each Right not
owned by an Acquiring Person following an event set forth in the preceding
paragraph would entitle its holder to purchase $100 worth of Common Shares (or
other consideration, as noted above) for $50. Assuming a value of $25 per Common
Share at such time, the holder of each valid Right would be entitled to purchase
four Common Shares for $50.
Flip-Over
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group becomes an
Acquiring Person, proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of Common Shares having a market value of two times the exercise
price of the Right.
Exchange
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
At any time prior to the existence of an Acquiring Person, the Board of
Directors of the Company may redeem the Rights, in whole but not in part, at a
price of $.001 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time on such basis with such conditions as the
Board of Directors, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to
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<PAGE> 54
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Amendment
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after the existence of an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights (other than the Acquiring
Person).
Adjustment
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are subject to
adjustment under certain circumstances.
Preferred Stock
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
Rights of Holders
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Further Information
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated February
3, 2000. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
C-3
