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DRAFT OF 9-29-97
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CONCENTRA MANAGED CARE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3363415
(State of incorporation (I.R.S. Employer
or organization) Identification Number)
312 UNION WHARF
BOSTON, MASSACHUSETTS 02109
(Address of principal (Zip code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act:
RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK,
PAR VALUE $.01 PER SHARE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- ------- -------------------------------------------------------
On September 17, 1997, the Board of Directors of Concentra Managed Care,
Inc., a Delaware corporation (the "Company"), declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $.01 per share (the "Common Shares"), of the Company. The
dividend is payable to the stockholders of record on September 29, 1995 (the
"Record Date"). As of September 29, 1997, 38,566,463 Common Shares were issued
and outstanding (assuming the exchange of all certificates representing shares
of Common Stock of OccuSystems, Inc., a Delaware corporation ("OccuSystems"),
and CRA Managed Care, Inc., a Massachusetts corporation ("CRA"), for Common
Shares pursuant to that certain Agreement and Plan of Reorganization dated April
21, 1997, among the Company, OccuSystems and CRA). Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company, at a price of $170 per one one-thousandth
of a Preferred Share subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") dated as of
September 29, 1997, between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
The Company hereby incorporates by reference the section entitled
"Description of Concentra Capital Stock - Stockholder Rights Plan" contained in
the Company's Registration Statement on Form S-4 (file no. 333-27105) filed with
the Securities and Exchange Commission on May 14, 1997, as amended (the
"Concentra Registration Statement").
ITEM 2. EXHIBITS
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1. Rights Agreement, dated as of September 29, 1997, between the Company
and the Rights Agent, specifying the terms of the Rights, which includes the
form of Certificate of Designation of Series A Junior Participating Preferred
Stock as Exhibit A, the form of Right Certificate as Exhibit B and the form of
the Summary of Rights as Exhibit C.
2. Form of Certificate of Designation of Series A Junior Participating
Preferred Stock (included as Exhibit A to the Rights Agreement filed as Exhibit
1 hereto) setting forth the terms of the Preferred Shares.
3. Form of Right Certificate (included as Exhibit B to the Rights
Agreement filed as Exhibit 1 hereto). Pursuant to the Rights Agreement, printed
Right Certificates will not be delivered until as soon as practicable after the
Distribution Date (as defined in the Rights Agreement).
4. Form of Summary of Rights to Purchase Preferred Shares (included as
Exhibit C to Rights Agreement filed as Exhibit 1 hereto) which, together with
certificates representing the outstanding Common Shares of the Company, shall
represent the Rights prior to the Distribution Date.
5. Specimen of legend to be placed, pursuant to Section 4(d) of the
Rights Agreement, on all new Common Share certificates issued by the Company
after September 29, 1997 and prior
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to the Distribution Date upon transfer, exchange or new issuance (included in
Section 4(d) of the Rights Agreement).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned thereto duly authorized.
CONCENTRA MANAGED CARE, INC.
Date: October 1, 1997 By: /s/ Richard A. Parr II
--------------------------------
Richard A. Parr II
Executive Vice President and
General Counsel
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EXHIBIT 4.1
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RIGHTS AGREEMENT
BETWEEN
CONCENTRA MANAGED CARE, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
DATED AS OF SEPTEMBER 29, 1997
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TABLE OF CONTENTS
Section 1. Certain Definitions...........................................-1-
Section 2. Appointment of Rights Agent...................................-7-
Section 3. Issue of Right Certificates...................................-7-
Section 4. Form of Right Certificates....................................-8-
Section 5. Execution, Authentication and Delivery........................-10-
Section 6. Registration, Registration of Transfer and Exchange...........-10-
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates......-11-
Section 8. Exercise of Rights; Purchase Price; Expiration Date
of Rights....................................................-12-
Section 9. Cancellation and Destruction of Right Certificates............-14-
Section 10. Reservation and Availability of Shares........................-14-
Section 11. Record Date...................................................-15-
Section 12. Adjustment of Purchase Price, Number of Shares or Number
of Rights....................................................-15-
Section 13. Certificate of Adjusted Purchase Price or Number of Shares....-21-
Section 14. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................-21-
Section 15. Fractional Rights and Fractional Shares.......................-22-
Section 16. Rights of Action..............................................-23-
Section 17. Agreement of Right Holders....................................-24-
Section 18. Right Certificate Holder Not Deemed a Stockholder.............-24-
Section 19. Concerning the Rights Agent...................................-25-
Section 20. Duties of Rights Agent........................................-25-
Section 21. Merger or Consolidation or Change of Name of Rights Agent.....-27-
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Section 22. Change of Rights Agent........................................-27-
Section 23. Issuance of New Right Certificates............................-28-
Section 24. Redemption....................................................-28-
Section 25. Mandatory Redemption and Exchange.............................-29-
Section 26. Notice of Certain Events......................................-30-
Section 27. Securities Laws Registrations.................................-31-
Section 28. Notices.......................................................-31-
Section 29. Supplements and Amendments....................................-32-
Section 30. Successors....................................................-33-
Section 31. Benefits of this Agreement....................................-33-
Section 32. Severability..................................................-33-
Section 33. Governing Law.................................................-33-
Section 34. Counterparts..................................................-33-
Section 35. Descriptive Headings..........................................-33-
Exhibits
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Exhibit A - Certificate of Designation of Preferred Shares Series A
Junior Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights To Purchase Preferred Shares
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CONCENTRA MANAGED CARE, INC.
RIGHTS AGREEMENT
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This Rights Agreement, dated as of September 29, 1997, is between Concentra
Managed Care, Inc., a Delaware corporation (the "COMPANY"), and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent.
WHEREAS, the Board of Directors of the Company, having determined its
actions to be in the interests of the Company, has authorized the creation of
Rights, has authorized and directed the issuance to the Holders of record of
Common Shares of the Company outstanding on September 29, 1997 (the "RECORD
DATE"), of one Right with respect to each Common Share of the Company
outstanding on the Record Date, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earlier of the Distribution Date,
the Redemption Date and the Final Expiration Date; and
WHEREAS, the Board of Directors of the Company has authorized and directed
that the terms and conditions under which the Rights are to be distributed,
including without limitation those affecting the exercise thereof, the
securities or other property to be acquired thereby and the purchase price to be
paid therefor, shall be set forth in a written agreement between the Company and
a rights agent made for the benefit of the holders of the Rights to the extent
so provided therein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
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following terms shall 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
15% or more of the Voting Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any trustee of or fiduciary
with respect to any such plan when acting in such capacity. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Voting Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Voting Shares of the Company then
outstanding; provided, however, that, if a Person shall become the Beneficial
Owner of 15% or more of the Voting Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company and at a time when such Person is the Beneficial Owner of 15% or
more of the Voting Shares of the Company then outstanding, become the Beneficial
Owner of any additional Voting Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person". Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become
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such inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring Person"
for any purposes of this Agreement.
(b) "AGREEMENT" shall mean this Rights Agreement as hereafter amended from
time to time.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of and shall be deemed
to "own beneficially" any securities which (without duplication):
(0) such Person or any of such Person's Affiliates or Associates has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time, compliance with regulatory requirements, the
fulfillment of a condition or otherwise) pursuant to any oral or written
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 in connection with a placement of securities
pursuant to Rule 144A under the Securities Act), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights), warrants
or options, or otherwise; or 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, 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 securities issuable upon exercise of
Rights at any time prior to any Person becoming an Acquiring Person;
(1) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to "beneficially own," any security under this
subparagraph (3) as a result of an agreement, arrangement or understanding to
vote such security which arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the
Exchange Act and is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(2) 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 oral or written 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 in connection with
a placement of securities pursuant to Rule
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144A under the Securities Act) for the purpose of acquiring, holding, voting
(other than voting pursuant to a revocable proxy as contemplated by the proviso
to subparagraph (3) of this paragraph) or disposing of any securities of the
Company.
Notwithstanding anything in this definition to the contrary, the
phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company (or to the number of such
securities "beneficially owned"), 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
own beneficially hereunder.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., Boston,
Massachusetts time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Boston, Massachusetts time, on the next
succeeding Business Day.
(g) "CLOSING PRICE", with respect to any security, shall mean the last sale
price, regular way, on a specific Trading Day or, in case no such sale takes
place on such Trading 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 such security is not then listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such security is
listed or admitted to trading or, if such security is not then listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System or such other system then in use, or,
if on any such Trading Day such 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 such security selected by the Board of Directors
of the Company. If such security is not publicly held or so listed or traded,
"Closing Price" shall mean the fair value per unit of such security as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described and the Closing Price set forth in a statement
filed with the Rights Agent.
(h) "COMMON SHARES" when used with reference to the Company shall mean
shares of capital stock of the Company which have no preference over any other
class of stock with respect to dividends or assets, which are not redeemable at
the option of the Company and with respect to which no sinking, purchase or
similar fund is provided and shall initially mean the shares of Common Stock,
par value $.01 per share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall, if used with reference to
a corporation, mean the capital stock (or equity
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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 and, if used with reference to any other
Person, mean the equity interest in such Person (or, if the net worth determined
in accordance with generally accepted accounting principles of another Person
(other than an individual) which controls such first-mentioned Person is greater
than such first-mentioned Person, then such other Person) with the greatest
voting power or managerial power with respect to the business and affairs of
such Person.
(i) "COMPANY" shall mean Concentra Managed Care, Inc., a Delaware
corporation, and its successors.
(j) "COMPANY ORDER" means a written request or order signed in the name of
the Company by its Chairman of the Board, its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Rights Agent.
(k) "CONTINUING DIRECTOR" shall mean (1) any member of the Board of
Directors of the Company, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person or
of any such Affiliate or Associate, or otherwise affiliated with an Acquiring
Person or of any such Affiliate or Associate, and was a member of the Board
immediately subsequent to the consummation of the Concentra Mergers prior to the
date of this Agreement, or (2) any Person who subsequently becomes a member of
the Board who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate or otherwise affiliated with an Acquiring Person of any
such Affiliate or Associate if such Person's nomination for election or election
or appointment to the Board is recommended by a majority of the Continuing
Directors.
(l) "CORPORATE TRUST OFFICE" means the principal office of the Rights Agent
at which it administers its corporate trust business, which, in the case of
ChaseMellon Shareholder Services, L.L.C. shall, until hereafter changed, be its
office at 2323 Bryan Street, Suite 2300, Dallas, Texas 75201.
(m) "DISTRIBUTION DATE" shall mean the earlier of the tenth Business Day
after the Shares Acquisition Date or the tenth Business Day (or such later date
as may be determined by action of the Board of Directors of the Company prior to
such time as any Person becomes an Acquiring Person) after the date of
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 trustee of or fiduciary with respect to any such plan when
acting in such capacity) of, or after the date of the first public announcement
of the intent 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 trustee of or fiduciary with respect to any such plan when
acting in such capacity) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of 15% or more of the then outstanding Voting Shares of the Company; provided,
however, that an occurrence
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described in clause (1) of this definition above shall not cause the occurrence
of the Distribution Date if the Board of Directors of the Company shall, prior
to such tenth Business Day (or such later date as described in clause (2)
above), determine that such tender or exchange offer is spurious, unless,
thereafter, the Board of Directors of the Company shall make a contrary
determination, in which event the Distribution Date shall occur on the later to
occur of such tenth Business Day (or such later date as described in clause (2)
above) and the date of such latter determination.
(n) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.
(o) "FINAL EXPIRATION DATE" shall mean the Close of Business on September
28, 2007.
(p) "CONCENTRA MERGERS" shall mean the (i) merger of OccuSystems, Inc., a
Delaware corporation ("OCCUSYSTEMS"), with and into the Company with the
separate corporate existence of OccuSystems ceasing and (ii) the merger of a
wholly-owned subsidiary of the Company with and into CRA Managed Care, Inc., a
Massachusetts corporation ("CRA"), with the separate corporate existence of such
subsidiary ceasing, pursuant to the terms of that certain Agreement and Plan of
Reorganization dated April 21, 1997, among OccuSystems, CRA and the Company.
(q) "PERSON" shall mean any individual, firm, corporation, partnership,
limited partnership, limited liability company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(r) "PREFERRED SHARES" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the form of Certificate of Designation of Series A
Junior Participating Preferred Stock attached hereto as Exhibit A.
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(s) "PURCHASE PRICE" shall mean the initial price at which the holder of a
Right may, subject to the terms and conditions of this Agreement, purchase one
one-thousandth (1/1000) of a Preferred Share (which initial price is set forth
in Section 8(b) hereof), as such price shall be adjusted pursuant to the terms
of this Agreement.
(t) "REDEMPTION DATE" shall mean the time at which the Rights are redeemed
pursuant to Section 24 herein or the time at which all of the Rights are
mandatorily redeemed and exchanged pursuant to Section 25 hereof.
(u) "REDEMPTION PRICE" shall have the meaning specified in Section 24(b)
herein.
(v) "RIGHT" shall mean one preferred share purchase right which initially
represents the right of the registered holder thereof to purchase one one-
thousandth (1/1000) of a Preferred Share upon the terms and subject to the
conditions herein set forth.
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(w) "RIGHT CERTIFICATE" shall mean a certificate, in substantially the form
of Exhibit B attached to this Rights Agreement, evidencing the Rights registered
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in the name of the holder thereof.
(x) "RIGHTS AGENT" shall mean ChaseMellon Shareholder Services, L.L.C., a
Delaware corporation, and any successor thereto appointed in accordance with the
terms hereof, in its capacity as agent for the Company and the holders of the
Rights pursuant to this Agreement.
(y) "RIGHTS REGISTER" and "RIGHTS REGISTRAR" shall have the meanings
specified in Section 6.
(z) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
any successor statute thereto.
(aa) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement (which for purposes of this definition shall include without
limitation a report filed pursuant to Section 13(d) or Section 16(a) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(bb) "SUBSIDIARY" of any Person shall mean any corporation or other entity
of which a majority of the outstanding capital stock or other equity interests
having ordinary voting power in the election of directors or similar officials
is owned, directly or indirectly, by such Person.
(cc) "SUMMARY OF RIGHTS" shall mean a Summary of Rights to Purchase
Preferred Shares in substantially the form attached as Exhibit C to this
---------
Agreement.
(dd) "TRADING DAY" shall mean a day on which the principal national
securities exchange on which any of the Voting Shares of the Company are listed
or admitted to trading is open for the transaction of business or, if none of
the Voting Shares of the Company is listed or admitted to trading on any
national stock exchange, a Business Day.
(ee) "VOTING SHARES" shall mean the Common Shares of the Company and any
other shares of capital stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with the Common Shares in
respect of any merger or consolidation of the Company, any sale of all or
substantially all of the Company's assets or any liquidation, dissolution or
winding up of the Company. Whenever any provision of this Agreement requires a
determination of whether a number of Voting Shares comprising a specified
percentage of such Voting Shares is, was or will be beneficially owned or has
been voted, tendered, acquired, sold or otherwise disposed of or a determination
of whether a Person has offered or proposed to acquire a number of Voting Shares
comprising such specified percentage, the number of Voting Shares comprising
such specified percentage of Voting Shares shall in every such case be deemed to
be the number of Voting Shares comprising the specified percentage of all the
Company's then outstanding Voting Shares.
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(ff) "WHOLLY-OWNED SUBSIDIARY" of a Person shall mean any corporation or
other entity all the outstanding capital stock or other equity interests of
which having ordinary voting power in the election of directors or similar
officials (other than directors' qualifying shares or similar interests) are
owned, directly or indirectly, by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company 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 Distribution Date, outstanding Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for outstanding Common Shares of the Company and not by separate
Right Certificates, and the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares of the
Company. As soon as practicable after the Distribution Date, the Company will
prepare and execute, and the Rights Agent will countersign and send, by first-
class, insured, postage-prepaid mail, to each record holder of Common Shares of
the Company as of the Close of Business on the Distribution Date, at the address
of such holder shown on the stock transfer records of the Company, a Right
Certificate evidencing one Right for each Common Share so held, subject to
adjustments as provided herein. From and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon thereafter as practicable, the Company
will send a copy of a Summary of Rights, by first-class, postage-prepaid mail,
to each record holder of Common Shares of the Company as of the Close of
Business on the Record Date, at the address of such holder shown on the stock
transfer records of the Company. With respect to Common Shares outstanding on
the Record Date, the certificates evidencing such Common Shares shall, together
with copies of such Summary of Rights, thereafter also evidence the outstanding
Rights (as such Rights may be amended or supplemented) distributed with respect
thereto until the earlier of the Distribution Date or the date of surrender
thereof to the Company's transfer agent for registration of transfer or exchange
of Common Shares. Until the Distribution Date (or, if earlier, the Redemption
Date or Final Expiration Date), the surrender for registration of transfer or
exchange of any certificate for Common Shares outstanding as of the Close of
Business on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the surrender for registration of
transfer or exchange of the outstanding Rights associated with the Common Shares
represented thereby.
(c) The Company agrees that, at any time after the Record Date and prior to
the Distribution Date (or, if earlier, the Redemption Date or Final Expiration
Date) at which it issues any of its Common Shares upon original issue or out of
treasury, it will concurrently distribute to the holder of such Common Shares
one Right for each such Common Share, which Right shall be subject to the terms
and provisions of this Agreement and will evidence the right to purchase the
same number of one one-thousandths (1/1000) of a Preferred Share at the same
Purchase Price as the Rights then outstanding.
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(d) Certificates for Common Shares issued after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, whether upon registration of transfer or exchange of Common
Shares outstanding on the Record Date or upon original issue or out of treasury
thereafter, shall have impressed on, printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Concentra Managed
Care, Inc. and ChaseMellon Shareholder Services, L.L.C., dated as of
September 29, 1997 (the "RIGHTS AGREEMENT"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Concentra Managed Care, Inc. 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. Concentra Managed Care, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. As described in the Rights Agreement, Rights
issued to or acquired by any Acquiring Person or any Affiliate or Associate
thereof (each as defined in the Rights Agreement) shall, under certain
circumstances, become null and void.
With respect to certificates containing the foregoing legend, until the earlier
of the Distribution Date or the Final Expiration Date, outstanding Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender of any such certificate
for registration of transfer or exchange of the Common Shares evidenced thereby
shall also constitute surrender for registration of transfer or exchange of the
outstanding Rights (as such Rights may be amended or supplemented) associated
with the Common Shares represented thereby.
(e) If the Company purchases or acquires any of its Common Shares after the
Record Date, but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
--------------------------
(a) The form of Right Certificates (and the forms of election to
purchase Preferred Shares (or other securities) and of assignment to be printed
on the reverse thereof) shall in form and substance be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and
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such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
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 on which the Rights may from time to time be listed or as may be
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necessary to conform to usage. Subject to the provisions of Section 23 hereof,
the Right Certificates, whenever issued, shall be dated as of the date of
authentication thereof, but, regardless of any adjustments of the Purchase Price
or the number of Preferred Shares (or other securities) as to which a Right is
exercisable (whether pursuant to this Agreement or any future amendments or
supplements to this Agreement), or both, occurring after the Record Date and
prior to the date of such authentication, such Right Certificates may, on their
face, without invalidating or otherwise affecting any such adjustment, expressly
entitle the holders thereof to purchase such number of Preferred Shares at the
Purchase Price per one one-thousandth (1/1000) of a Preferred Share as to which
a Right would be exercisable if the Distribution Date were the Record Date; no
adjustment of the Purchase Price or the number of Preferred Shares (or other
securities) as to which a Right is exercisable, or both, effected subsequent to
the date of authentication of any Right Certificate shall be invalidated or
otherwise affected by the fact that such adjustment is not expressly reflected
on the face or in the provisions of such Right Certificate.
(b) Pending the preparation of definitive Right Certificates, the Company
may execute, and upon Company Order the Rights Agent shall authenticate and
send, by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares of the Company as of the Close of Business on the Distribution
Date, temporary Right Certificates which are printed, lithographed, typewritten,
mimeographed or otherwise produced substantially of the tenor of the definitive
Right Certificates in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Right Certificates may determine, as evidenced by their execution
of such Right Certificates.
(c) If temporary Right Certificates are issued, the Company will cause
definitive Right Certificates to be prepared without unreasonable delay. After
the preparation of definitive Right Certificates, the temporary Right
Certificates shall be exchangeable for definitive Right Certificates, upon
surrender of the temporary Right Certificates at the Corporate Trust Office of
the Rights Agent, without charge to the holder. Upon surrender for cancellation
of any one or more temporary Right Certificates, the Company shall execute and
the Rights Agent shall authenticate and deliver in exchange therefor one or more
definitive Right Certificates, evidencing a like number of Rights. Until so
exchanged, the temporary Right Certificates shall in all respects be entitled to
the same benefits under this Agreement as definitive Right Certificates.
(d) Any Right Certificate issued pursuant to Section 3(a) or Section 23
hereof that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary
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<PAGE>
purpose or effect avoidance of Section 8(e) hereof, and any Right Certificate
issued pursuant to Section 6 or Section 7 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 8(e) of such Agreement.
SECTION 5. EXECUTION, AUTHENTICATION AND DELIVERY.
--------------------------------------
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Right
Certificates may be manual or facsimile.
(b) Right Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Right
Certificates or did not hold such offices at the date of authentication of such
Right Certificates. At any time and from time to time after the execution and
delivery of this Agreement and prior to the Distribution Date, the Company may
deliver Right Certificates executed by the Company to the Rights Agent for
authentication, together with a Company Order for the authentication and
delivery of such Right Certificates; and the Rights Agent in accordance with
such Company Order shall authenticate and deliver such Right Certificates as in
this Agreement provided and not otherwise.
(c) No Right Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Right Certificate a certificate of authentication substantially in the form
provided for herein executed by the Rights Agent by manual signature, and such
certificate upon any Right Certificate shall be conclusive evidence, and the
only evidence, that such Right Certificate has been duly authenticated and
delivered hereunder.
SECTION 6. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
---------------------------------------------------
(a) From and after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, the Company shall cause to be
kept at the Corporate Trust Office of the Rights Agent a Rights Register (a
"RIGHTS REGISTER") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Right Certificates
and of transfers of Rights. The Rights Agent is hereby
-10-
<PAGE>
appointed the registrar and transfer agent (the "RIGHTS REGISTRAR") for the
purpose of registering Right Certificates and transfers of Rights as herein
provided and the Rights Agent agrees to maintain such Rights Register in
accordance with such regulations so long as it continues to be designated as
Rights Registrar hereunder.
(b) Upon surrender to the Rights Agent for registration of transfer of any
Right Certificate, the Company shall execute, and the Rights Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Right Certificates evidencing a like number of
Rights.
(c) At the option of the holder, Right Certificates may be exchanged for
other Right Certificates upon surrender of the Right Certificates to be
exchanged to the Rights Agent. Whenever any Right Certificates are so
surrendered for exchange, the Company shall execute, and the Rights Agent shall
authenticate and deliver, the Right Certificates which the holder making the
exchange is entitled to receive.
(d) All Right Certificates issued upon any registration of transfer or
exchange of Right Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Right Certificates surrendered upon such registration of
transfer or exchange.
(e) Every Right Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made for any registration of transfer or
exchange of Right Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Right Certificates,
other than exchanges not involving any transfer.
(g) The provisions of this Section 6 shall be subject to the provisions of
Section 4(d), Section 8(e) and Section 15.
SECTION 7. MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES.
--------------------------------------------------------
(a) If any mutilated Right Certificate is surrendered to the Rights Agent,
the Company shall execute and the Rights Agent shall authenticate and deliver in
exchange therefor a new Right Certificate of like tenor, for a like number of
Rights and bearing a registration number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Rights Agent
evidence to their satisfaction of the destruction, loss or theft of a Right
Certificate and such security or indemnity, if any, as may be required by them
to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Rights
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<PAGE>
Agent that such Right Certificate has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Rights Agent shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Right
Certificate, a new Right Certificate of like tenor, for a like number of Rights
and bearing a registration number not contemporaneously outstanding.
(c) Upon the issuance of any new Right Certificate under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) Every new Right Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Right Certificate shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Right Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and proportionately
with any and all other Right Certificates duly issued hereunder.
(e) The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Right Certificates.
SECTION 8. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
--------------------------------------------------------------
(a) Subject to the provisions of Section 8(e) hereof, 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 its Corporate Trust Office, together with payment of the Purchase Price
for each one one-thousandth (1/1000) of a Preferred Share (or other securities)
as to which the Rights are exercised, at or prior to the earliest of the Close
of Business on the Final Expiration Date, the time of redemption on the
Redemption Date or the time at which such Rights are mandatorily redeemed and
exchanged as provided in Section 25 hereof.
(b) The Purchase Price for each one one-thousandth (1/1000) of a Preferred
Share pursuant to the exercise of a Right shall initially be $170, shall be
subject to adjustment from time to time as provided in Sections 12 and 14 hereof
and 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 securities 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 10 in cash, or by certified check or
cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly requisition from any transfer agent of the Preferred
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Shares (or other securities) certificates for such number of one one-thousandths
of a Preferred Share (or other securities) as are to be purchased and registered
in such name or names as may be designated by the registered holder of such
Right Certificate or, if appropriate, in the name of a depositary agent or its
nominee, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or if the Company shall have elected to deposit
the total number of Preferred Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from such depositary agent
appointed by the Company, depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased and registered in
such name or names as may be designated by such holder (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent), and the Company
hereby directs such depositary agent to comply with all such requests, when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 15 hereof, promptly
after receipt of such certificates or depositary receipts registered in such
name or names as may be designated by such holder, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate and when appropriate, after receipt, promptly deliver such cash to
or upon the order of such holder. In the event that the Company is obligated to
issue other securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 12(a) hereof, the Company will
make all arrangements necessary so that other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) If the registered holder of the Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equal to the Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if any
Person shall become an Acquiring Person, thereafter any Rights beneficially
owned by such Acquiring Person or an Associate or Affiliate of such Acquiring
Person, a transferee of such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or a transfer which the Board of Directors has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 8(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 8(e) and Section 4(d) hereof are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to any Acquiring
Person or its Affiliates, Associates or transferees hereunder.
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<PAGE>
SECTION 9. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up
or exchange shall, if surrendered to the Company or to any of its other agents,
be delivered to the Rights Agent for such purpose and for cancellation or, if
surrendered to the Rights Agent for such purpose, shall be canceled by it. No
Right Certificates shall be authenticated in lieu of or in exchange for any
Right Certificates canceled as provided in this Section except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, pursuant to a Company
Order, destroy such canceled Right Certificates and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 10. RESERVATION AND AVAILABILITY OF 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.
(b) The Company further covenants and agrees that it will, from and after
the Distribution Date, cause to be reserved and kept available out of its
authorized and unissued Common Shares or any Common Shares held in its treasury,
the number of Common Shares of the Company that will be sufficient to permit the
exercise in full of all outstanding Rights if adjusted pursuant to Section
12(a)(2).
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares or Common Shares of the
Company issued upon exercise of Rights shall (subject to payment of the Purchase
Price) at the time of delivery of the certificates representing any such
Preferred Shares or Common Shares be duly authorized, validly issued, fully paid
and nonassessable. 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 (or depositary receipts therefor) or
Common Shares of the Company 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 in respect of the issuance or delivery of certificates or depositary
receipts for the Preferred Shares or Common Shares of the Company upon exercise
of Rights evidenced by Right Certificates in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
transfer or exercise or to issue or deliver any certificates or depositary
receipts for Preferred Shares or Common Shares of the Company 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
thereof) or until it has been established to the Company's satisfaction that no
such tax is due.
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<PAGE>
(d) So long as the Common Shares issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange, the Company
shall use its best efforts to promptly cause, from and after such time as the
Rights become exercisable, all Common Shares and other securities reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
SECTION 11. RECORD DATE. Each Person in whose name any certificate for
-----------
Preferred Shares or Common Shares of the Company is issued upon the exercise of,
or upon mandatory redemption and exchange of, Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares or Common
Shares represented thereby on, and such certificate shall be dated, in the case
of the exercise of Rights, 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, or in the case of the mandatory redemption
and exchange of Rights, the date of such mandatory redemption and exchange;
provided, however, that, if the date of such surrender and payment or mandatory
redemption and exchange is a date upon which the transfer books of the Company
for its Preferred Shares or Common Shares, as the case may be, are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which such
transfer books of the Company are open. Prior to the exercise of (or the
mandatory redemption and exchange of) the Rights evidenced thereby, the holder
of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares (or Common Shares of the Company) for which the Rights shall be
exercisable, including without limitation the rights 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 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
-----------------------------------------------------------
RIGHTS. The Purchase Price, the number and kind of shares of capital stock
- -------
of the Company covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 12.
(a) If the Company shall at any time after the date of this Agreement
declare a dividend on the Preferred Shares payable in Preferred Shares,
subdivide the outstanding Preferred Shares, combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or 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 12(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 thereafter shall be entitled to receive, upon
payment of the Purchase Price for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
date, the aggregate number and kind of shares of capital stock which, if such
Right had been duly exercised immediately prior
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<PAGE>
to such date (at a time when the Preferred Shares transfer books of the Company
were open), such holder would have acquired upon such exercise and been entitled
to receive upon payment or effectuation of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both Section 12(a)(1) and Section 12(a)(2), the adjustment provided for in
this Section 12(a)(1) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 12(a)(2).
(1) Subject to action of the Board of Directors of the Company
pursuant to Section 25 of this Agreement, if any Person shall become 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-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 12(d)) on the date such Person became an Acquiring Person.
If 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.
(2) If on or after the Distribution Date there shall not be sufficient
Common Shares issued but not outstanding, or authorized but unissued, to permit
the exercise in full of all outstanding Rights in accordance with the foregoing
subparagraph (2) of this Section 12(a), the Company agrees to take all such
action as is within its power, including without limitation appropriate action
by its Board of Directors, as may be necessary to amend the Company's charter to
authorize additional Common Shares for issuance upon exercise of the Rights.
If, notwithstanding the foregoing, the stockholders shall not approve an
amendment to the Company's charter authorizing such additional Common Shares,
the adjustment prescribed in Section 12(a)(2) shall not be made but, in lieu
thereof, each holder of a Right shall thereafter have the right to receive, upon
exercise thereof in accordance with the terms of this Agreement, such number of
one one-thousandths of Preferred Shares as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of one one-
thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
one one-thousandth of a Preferred Share (determined pursuant to Section 12(d))
on the date such Person became an Acquiring Person.
(b) If 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 or exchangeable for Preferred
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Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (together with any additional consideration required
upon conversion or exchange in the case of a security convertible into or
exchangeable for Preferred Shares or equivalent preferred shares), less than the
current per share market price of the Preferred Shares (determined pursuant to
Section 12(d) on such record date), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such 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
(together with the aggregate of any additional consideration required upon
conversion or exchange in the case of any convertible or exchangeable 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 or for
which the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case all or part of such subscription or purchase
price may be paid 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. Preferred Shares owned by or held for the account of the Company or any
of its Subsidiaries shall not be deemed outstanding for the purpose of any
computation described in this Section 12(b). The adjustment described in this
Section 12(b) shall be made successively whenever such a record date is fixed;
and, if none of such rights, options or warrants are 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) If 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 12(b)),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share market
price of the Preferred Shares (determined pursuant to Section 12(d)) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the 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 the exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and, if 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.
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<PAGE>
(d) For the purpose of any computation hereunder, the "CURRENT PER SHARE
MARKET PRICE" of the Common Shares on any date shall be deemed to be the average
of the daily Closing Prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date; provided, however,
that, if the issuer of such Common Shares shall announce a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares or any subdivision, combination or
reclassification of such Common Shares, and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, shall occur during such period of 30 Trading Days, then,
and in each such case, the current per share market price of the Common Shares
shall be appropriately adjusted to reflect the current market price per Common
Share equivalent.
(1) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in the same
manner as set forth above for Common Shares in paragraph (1) of this Section
12(d). If the current per share market price of the Preferred Shares cannot be
determined in the manner provided above, 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 (determined in the manner provided above)
multiplied by one thousand.
(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
12(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 12
shall be made to the nearest cent or to the nearest ten-thousandth of a Common
Share or other share or one ten-millionth of a Preferred Share, as the case may
be, and references herein to the "NUMBER OF ONE ONE-THOUSANDTHS OF A PREFERRED
SHARE" (or similar phrases) shall be construed to include fractions of one one-
thousandth of a Preferred Share. Notwithstanding the first sentence of this
Section 12(e), any adjustment required by this Section 12 shall be made no later
than the earlier of three years from the date of the transaction which requires
such adjustment or the thirtieth day preceding the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 12(a), 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 shares contained
in this Section 12, and the provisions of this Agreement, including without
limitation Sections 8, 10, 11 and 14, 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, whether or not the Right
Certificate
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evidencing such Rights reflects such adjusted Purchase Price, evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-thousandths
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 12(i), upon each adjustment of the Purchase Price pursuant to Section
12(b) or 12(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price per one one-thousandth of a Preferred Share, that number of one
one-thousandths of a Preferred Share obtained by multiplying (x) the number of
one-thousandths 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 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 outstanding in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each Right outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-thousandths
of a Preferred Share for which a Right was exercisable immediately prior to such
adjustment of the Purchase Price. 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 ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least ten days later than
the date of the public announcement. Until such record date, however, any
adjustment in the number of one one-thousandths of a Preferred Share for which a
Right shall be exercisable made as required by this Agreement shall remain in
effect. If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 12(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 15 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 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 authenticated 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-thousandths of a Preferred Share issuable upon the exercise of
the Rights, the
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Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-thousandths 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-thousandth of the amount of consideration per
Preferred Share determined by the Board of Directors of the Company to be
capital, or below one one-thousandth of the par value, if any, per Preferred
Share issuable upon exercise of the Rights, the Company agrees to take such
corporate action as is within its power, including without limitation
appropriate action by its Board of Directors, and which is, in the opinion of
its counsel, necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-thousandths of Preferred Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 12 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of the
Preferred Shares or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares or 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
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 12 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 12, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Shares, issuance
wholly for cash of any of the 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 in subsection (b) of this Section 12, hereafter effected by
the Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) If at any time prior to the Distribution Date, the Company shall
declare or pay any dividend on the Common Shares payable in Common Shares or
effect a subdivision or combination 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 the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision or combination shall be adjusted by multiplying such
Purchase Price 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 the
number of Rights outstanding immediately after such event shall be adjusted,
either through cancellation of outstanding Rights or through distribution of
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additional Rights (but without duplication of the Company's obligations under
Section 3(c)), so that the certificate evidencing each Common Share outstanding
immediately after such event shall also evidence the associated Right to
purchase the same number of one one-thousandths of a Preferred Share as to which
a Right would have entitled the holder thereof to purchase immediately prior to
such event. The adjustment provided for in this Section 12(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision
or combination is effected. If an event occurs which would require an
adjustment under Section 12(a)(2) and this Section 12(n), the adjustments
provided for in this Section 12(n) shall be in addition and prior to any
adjustment required pursuant to Section 12(a)(2).
SECTION 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 12 or 14 hereof, the
Company shall promptly prepare a certificate setting forth such adjustment, and
a brief statement of the facts accounting for such adjustment, promptly file
with the Rights Agent and with each transfer agent for the Common Shares of the
Company and the Preferred Shares a copy of such certificate and mail a brief
summary thereof to each holder of record of a Right Certificate in accordance
with Section 28 hereof.
SECTION 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
--------------------------------------------------------------
POWER. If, directly or indirectly, at any time following the Shares
- -----
Acquisition Date, the Company shall consolidate with, or merge with and into,
any other Person, any Person shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with any such merger, all or part of the Common Shares of the Company
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 the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or a series of two or more transactions, assets of
the Company or its Subsidiaries which constitute more than 50% of the assets or
which produce more than 50% of the earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or any Affiliate or Associate of
such Person other than the Company or one or more of its Wholly-Owned
Subsidiaries, then, and in each such case, the Company agrees that, as a
condition to engaging in any such transaction, it will make or cause to be made
proper provision so that each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this 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) or, if such other Person is a
Subsidiary of another Person, of the Person or Persons (other than individuals)
which ultimately control such first-mentioned Person, as shall be equal to the
result obtained by (X) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section 12(a)(2)) and dividing that product by (Y) 50% of the current per
share market price of the Common Shares of such other Person (determined
pursuant to Section 12(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; 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
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<PAGE>
pursuant to this Agreement; the term "COMPANY," as used herein, shall thereafter
be deemed to refer to such issuer; and such issuer shall take such steps
(including without limitation the reservation of a sufficient number of shares
of its Common Shares in accordance with Section 10) 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 enter into any transaction of the kind referred to in this
Section 14 if at the time of such transaction there are outstanding any rights,
warrants, instruments or securities or any agreement or arrangements which, as a
result of the consummation of such transaction, would substantially diminish or
otherwise eliminate the benefits intended to be afforded by 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 an agreement supplemental to this Agreement
complying with the provisions of this Section 14. The provisions of this Section
14 shall similarly apply to successive mergers or consolidations or sales or
other transfers. For the purposes of this Section 14, 50% of the assets of the
Company and its Subsidiaries shall be determined by reference to the book value
of such assets as set forth in the most recent consolidated balance sheet of the
Company and its Subsidiaries (which need not be audited) and 50% of the earning
power of the Company and its Subsidiaries shall be determined by reference to
the mathematical average of the operating income resulting from the operations
of the Company and its Subsidiaries for the two most recent full fiscal years as
set forth in the consolidated and consolidating financial statements of the
Company and its Subsidiaries for such years; provided, however, that, if the
Company has, during such period, engaged in one or more transactions to which
purchase accounting is applicable, such determination shall be made by reference
to the pro forma operating income of the Company and its Subsidiaries giving
effect to such transactions as if they had occurred at the commencement of such
two-year period.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
---------------------------------------
(a) The Company shall not be required to issue or distribute Right
Certificates which evidence fractional Rights. If, on the Distribution Date or
thereafter, as a result of any adjustment effected pursuant to Section 12(i) or
otherwise hereunder, a Person would otherwise be entitled to receive a Right
Certificate evidencing a fractional Right, the Company shall, in lieu thereof,
pay or cause to be paid to such Person an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purpose of this
Section 15(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.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
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-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth 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
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<PAGE>
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. If, on the Distribution Date or thereafter, as a result of any
adjustment effected hereunder in the number of one one-thousandths of a
Preferred Share as to which a Right has become exercisable, a Person would
otherwise be entitled to receive a fractional Preferred Share that is not an
integral multiple of one one-thousandth of a Preferred Share, the Company shall,
in lieu thereof, pay to such Person at the time such Right is exercised as
herein provided an amount in cash equal to the same fraction (which is not an
integral multiple of one one-thousandth of a Preferred Share) of the current
market value of one Preferred Share. For purposes of this Section 15(b), the
current market value of a Preferred Share shall be the Closing Price of a
Preferred Share for the Trading Day immediately prior to the date of such
exercise.
(c) Should any adjustment contemplated by Section 12(a)(2) or any mandatory
redemption and exchange contemplated by Section 25 occur, the Company shall not
be required to issue fractions of Common Shares upon exercise of the Rights or
to distribute certificates which evidence fractional Common Shares. If after
any such adjustment or mandatory redemption and exchange, a Person would
otherwise be entitled to receive a fractional Common Share of the Company upon
exercise of any Right Certificate or upon mandatory redemption and exchange as
contemplated by Section 25, the Company shall, in lieu thereof, pay to such
Person at the time such Right is exercised as herein provided or upon such
mandatory redemption and exchange an amount in cash equal to the same fraction
of the current market value of one Common Share. For purposes of this Section
15(c), the current market value of a Common Share shall be the Closing Price of
a Common Share for the Trading Day immediately prior to the date of such
exercise or the date of such mandatory redemption and exchange.
(d) The holder of a Right by the acceptance thereof expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise or
mandatory redemption and exchange of a Right (except as provided above).
SECTION 16. RIGHTS OF ACTION.
----------------
(a) All rights of action in respect of the obligations and duties owed to
the holders of the Rights under this Agreement are vested in the registered
holders of the Rights; and, without the consent of the Rights Agent or of the
holder of any other Rights, any registered holder of any Rights may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding, judicial or otherwise, against the Company to
enforce, or otherwise to act in respect of, such holder's right to exercise such
Rights in the manner provided in the Right Certificate evidencing such Rights
and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
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<PAGE>
(b) No right or remedy herein conferred upon or reserved to the registered
holder of Rights is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy, whether hereunder or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
(c) No delay or omission of any registered holder of Rights to exercise any
right or remedy accruing hereunder shall impair any such right or remedy or
constitute a waiver of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law to such holders may be exercised from
time to time, and as often as may be deemed expedient, by such holders.
SECTION 17. 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 of the Company;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the Corporate
Trust Office of the Rights Agent duly endorsed or accompanied by a proper
instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares certificate
made by anyone other than the Company or the Rights Agent) for all purposes, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
-------- -------
such order, decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
-------------------------------------------------
holder, as such, of any Right (whether or not then evidenced by a Right
Certificate) shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares, Common Shares of the Company or any
other securities of the Company which may at any
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<PAGE>
time be issuable on the exercise (or mandatory redemption and exchange) of the
Rights represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon any such holder, as such, any of the
rights of a stockholder of the Company, including without limitation any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26) or to receive dividends or
subscription rights or otherwise.
SECTION 19. 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 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
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Preferred Shares, Common Shares or other securities of the
Company, Company Order, 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
executed and, where necessary, verified or acknowledged, by the proper person or
persons, or otherwise upon the advice of its counsel as set forth in Section 20
hereof.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary 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
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
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<PAGE>
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company or any other
Person only for its own negligence, bad faith or willful misconduct. Anything
in this Agreement to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its authentication 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 have any responsibility with respect to the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or with respect to the validity or
execution of any Right Certificate (except its authentication thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 12(a)(2) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 12, 14, 24 and 25, or the ascertainment 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 or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be duly authorized, validly
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary 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 to be taken by it in good faith in accordance with instructions of any
such officer.
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<PAGE>
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company.
(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 of 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. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
---------------------------------------------------------
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 corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 22. If at the time such successor
Rights Agent shall succeed to the agency created by this Agreement any of the
Right Certificates shall have been authenticated but not delivered, any such
successor Rights Agent may adopt the authentication of the predecessor Rights
Agent and deliver such Right Certificates so authenticated, and, if at that time
any of the Right Certificates shall not have been authenticated, any successor
Rights Agent may authenticate such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
If at any time the name of the Rights Agent shall be changed and at such
time any of the Right Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Right Certificates so authenticated; and, in case at that time any
of the Right Certificates shall not have been authenticated, the Rights Agent
may authenticate such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
SECTION 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
for the Common Shares of the Company and the 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 for the
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<PAGE>
Common Shares of the Company and the 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 registered holder of a Right Certificate (or, prior to the Distribution
Date, of Common Shares), then any registered holder of a Right Certificate (or,
prior to the Distribution Date, of Common Shares) 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
either (a) a corporation organized and doing business under the laws of the
United States or of any state of the United States, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million, or (b) an affiliate of such a corporation. 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 for the Common Shares of the Company and the 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 22,
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 23. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities purchasable under the Right Certificates made in accordance
with the provisions of this Agreement.
SECTION 24. REDEMPTION.
----------
(a) The Rights may be redeemed by action of the Board of Directors of the
Company pursuant to paragraph (b) of this Section 24, or may be redeemed and
exchanged by action of the Board of Directors of the Company pursuant to Section
25 herein, but shall not be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its option, at any time
prior to the time any Person becomes an Acquiring Person redeem all but not less
than all the then outstanding Rights at a redemption price of one tenth of a
cent ($0.001) per Right then outstanding, appropriately adjusted to reflect any
adjustment in the number of Rights outstanding pursuant to Section 12(i) herein
(such redemption price being hereinafter
-28-
<PAGE>
referred to as the "REDEMPTION PRICE"). Any such redemption of the Rights by the
Board of Directors may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may establish.
(c) The right of the registered holders of Right Certificates to exercise
the Rights evidenced thereby or, if the Distribution Date has not theretofore
occurred, the inchoate right of the registered holders of Rights to exercise the
same shall, without notice to such holders or to the Rights Agent and without
further action, terminate and be of no further force or effect effective as of
the time of adoption by the Board of Directors of the Company of a resolution
authorizing and directing the redemption of the Rights pursuant to paragraph (b)
of this Section 24 (or, alternatively, if the Board of Directors qualified such
action as to time, basis or conditions, then at such time, on such basis and
with such conditions as the Board of Directors may have established pursuant to
such paragraph (b)); thereafter, the only right of the holders of Rights shall
be to receive the Redemption Price. The Company shall promptly give public
notice of any redemption resolution pursuant to paragraph (b) of this Section
24; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within ten days after
the adoption of any redemption resolution pursuant to paragraph (b) of this
Section 24, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agents for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption shall state the method by which the payment of the
Redemption Price will be made.
(d) Neither the Company nor any of its Affiliates or Associates may acquire
(other than, in the case of such Affiliates and Associates, in their capacity as
holders of Common Shares of the Company), redeem or purchase for value any
Rights at any time in any manner other than as specifically set forth in this
Section 24 or in Section 25 herein, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
SECTION 25. MANDATORY REDEMPTION AND EXCHANGE.
---------------------------------
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, issue Common Shares of the Company
in mandatory redemption of, and in exchange for, all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 8(e) hereof) at an
exchange ratio of one Common Share for each two Common Shares for which each
Right is then exercisable pursuant to the provisions of Section 12(a)(2) hereof.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such redemption and exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any such Subsidiary, or any trustee of or fiduciary with respect to any
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<PAGE>
such plan when acting in such capacity), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Voting Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25 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 such number of Common
Shares as is provided in paragraph (a) of this Section 25. The Company shall
promptly give public notice of any such redemption and exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such redemption and exchange. The Company promptly shall
mail a notice of any such redemption and exchange to all 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
mandatory redemption and exchange shall state the method by which the redemption
and exchange of the Common Shares for Rights will be effected and, in the event
of any partial redemption and exchange, the number of Rights which will be
redeemed and exchanged. Any partial redemption and exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section 8(e) hereof) held by each holder
of Rights.
(c) In any mandatory redemption and exchange pursuant to this Section 25,
the Company, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 12(b) hereof) for Common
Shares, at the initial rate of one one-thousandth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted.
SECTION 26. NOTICE OF CERTAIN EVENTS. If the Company shall, on or after
------------------------
the Distribution Date, propose to pay any dividend or other distribution
payable in stock of any class of the Company or any Subsidiary of the Company to
the holders of its Preferred Shares, to distribute 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, to make any other distribution to the holders of
its Preferred Shares (other than a regular quarterly cash dividend), to effect
any reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), 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 more than 50% of the assets or
earning power of the Company and its Subsidiaries (determined as provided in
Section 14 herein) to, any other Person (other than the Company or a Wholly-
Owned Subsidiary or Wholly-Owned Subsidiaries), to effect the liquidation,
dissolution or winding up of the Company or if the Rights have theretofore
become exercisable with respect to Common Shares pursuant to Section 12(a)(2)
herein, to declare or pay any dividend or other distribution on the Common
Shares payable in Common Shares or in stock of any other class of the Company or
any Subsidiary of the Company or to effect a subdivision or combination of the
Common Shares (by reclassification or otherwise than by payment of
-30-
<PAGE>
dividends in Common Shares) then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 28 hereof, notice
of such proposed action, which shall specify the date of authorization by the
Board of Directors of the Company of, and record date for, such stock dividend
or such distribution of rights or warrants or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, winding up, subdivision or combination is to take place and the
date of participation therein by the holders of the Common Shares of the Company
or the Preferred Shares, or both, if any such date is to be fixed. Such notice
shall be so given in the case of any action covered by clause (a), (b) or (g)
above at least 20 days prior to the record date for determining holders of the
Preferred Shares or of the Common Shares of the Company, as the case may be, for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares or Common Shares of
the Company, as the case may be, whichever shall be the earlier.
If any of the events set forth in Section 12(a)(2) of this Agreement shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 28 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
12(a)(2) hereof.
SECTION 27. SECURITIES LAWS REGISTRATIONS. To the extent legally
-----------------------------
required, the Company agrees that it will prepare and file, no later than the
Distribution Date, and will use its best efforts to cause to be declared
effective, a registration statement under the Securities Act registering the
offering, sale and delivery of the Preferred Shares issuable upon exercise of
the Rights, and the Company will, thereafter, use its best efforts to maintain
such registration statement (or another) continuously in effect so long as any
Rights remain outstanding and exercisable with respect to Preferred Shares.
Should the Rights become exercisable with respect to securities of the Company
or one of its Subsidiaries other than Preferred Shares, the Company agrees that
it will, to the extent legally required, promptly thereafter prepare and file,
or cause to be prepared and filed, and will use its best efforts to cause to be
declared effective, a registration statement under such Act registering the
offering, sale and delivery of such other securities and the Company will,
thereafter, use its best efforts to maintain such registration statement (or
another) continuously in effect so long as any outstanding Rights are
exercisable with respect to such securities. The Company further agrees to use
its best efforts, from and after the Distribution Date, to qualify or register
for sale the Preferred Shares or other securities of the Company or one of its
Subsidiaries issuable upon exercise of the Rights under the securities or "blue
sky" laws (to the extent legally required thereunder) of all jurisdictions in
which registered holders of Right Certificates reside determined by reference to
the Rights Register.
SECTION 28. NOTICES. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
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<PAGE>
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Attn: Chief Executive Officer
and to: Concentra Managed Care, Inc.
3010 LBJ Freeway, Suite 400
Dallas, Texas 75234
Attn: General Counsel
Subject to the provisions of Section 22 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
2323 Bryan Street, Suite 2300
Dallas, Texas 75201
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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 Rights
Register of the Company or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.
SECTION 29. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
--------------------------
time supplement or amend this Agreement (which supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent) 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, to make any other provisions in
regard to matters or questions arising hereunder, or to add, delete, modify or
otherwise amend any provision, which the Company may deem necessary or
desirable, including without limitation extending the Final Expiration Date and,
provided that at the time of such amendment or supplement the Distribution Date
has not occurred, the period during which the Rights may be redeemed; provided,
however, that, from and after such time as any Person becomes an Acquiring
Person, any such amendment or supplement shall not materially and adversely
affect the interests of the holders of Right Certificates. Without limiting the
foregoing, the Board of Directors of the Company may by resolution adopted at
any time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the threshold set forth in the definitions of Acquiring
Person and Distribution Date herein from 15% to a percentage not less than the
greater of any percentage greater than the largest percentage of the
outstanding Voting Shares then known to the Company to be beneficially owned 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 trustee
of or fiduciary with respect to any such plan when acting in such
-32-
<PAGE>
capacity), and 10% if the Board of Directors shall determine that a Person whose
interests are adverse to the Company and its stockholders may seek to acquire
control of the Company.
SECTION 30. SUCCESSORS. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 31. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights.
SECTION 32. SEVERABILITY. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
SECTION 33. GOVERNING LAW. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 34. COUNTERPARTS. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 35. DESCRIPTIVE HEADINGS. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
-33-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
CONCENTRA MANAGED CARE, INC.
Attest:
By: By:
---------------------------- ---------------------------------------
Richard A. Parr II Donald J. Larson
Secretary President and Chief Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
As Rights Agent
Attest:
By: By:
----------------------- ------------------------------------
Name: Name:
--------------------- ----------------------------------
Title: Authorized Officer Title: Authorized Officer
-34-
<PAGE>
EXHIBIT A
---------
FORM OF
-------
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
CONCENTRA MANAGED CARE, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
Concentra Managed Care, Inc., a Delaware corporation (the "CORPORATION"),
through the undersigned duly authorized officer, in accordance with the
provisions of Sections 103 and 151 of the General Corporation Law of the State
of Delaware, DOES HEREBY CERTIFY:
That the Board of Directors of the Corporation on September 29, 1997,
pursuant to the authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the Corporation (the "CERTIFICATE
OF INCORPORATION") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, adopted the following
resolution creating a series of 250,000 shares of Preferred Stock, par value
$.01 per share:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation in accordance with the provisions
of Article IV, Section B of its Certificate of Incorporation, a series of the
Preferred Stock of the Corporation, par value $.01 per share, be, and it hereby
is, created and that the voting powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Series A Junior Participating Preferred Stock:
- ---------------------------------------------
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series A Junior Participating Preferred Stock" (the "SERIES A
PREFERRED STOCK") and the number of shares constituting the Series A Preferred
Stock shall be 250,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
A-1
<PAGE>
Section 2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $0.01
per share (the "COMMON STOCK"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable on the first business day of February, May, August and November in each
year (each such date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT
DATE") as provided in paragraphs (b) and (c) of this Section 2 in an amount per
share (rounded to the nearest cent) equal to the greater of (1) $1.00 in cash or
(2) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount (payable in cash) of all cash dividends, and
1,000 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 A Preferred Stock. If the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (2) 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 was
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (a) of this Section 2 immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, if no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share payable in cash on the
Series A Preferred Stock shall nevertheless accrue and be cumulative on the
outstanding shares of Series A Preferred Stock as provided in paragraph (c) of
this Section 2.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, 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
A-2
<PAGE>
holders of shares of Series A 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 A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
If the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that was outstanding immediately
prior to such event.
(b) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) Except as set forth herein or as otherwise provided by law, holders of
Series A 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.
Section 4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, or declared and a sum sufficient for the payment therefor be
set apart for payment and be in the process of payment, the Corporation shall
not:
A-3
<PAGE>
(1) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(2) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
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;
(3) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (as to both dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(4) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of 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 holders of the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
--------------------------------------
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the
A-4
<PAGE>
holders of shares of stock ranking junior (either as to dividends or as to
amounts payable upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of Series A Preferred Stock
shall have received an amount per share (rounded to the nearest cent) equal to
the greater of (1) $1,000 per share, or (2) an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, plus,
in either case, an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(b) to the holders of stock ranking on a parity (either as to dividends or as to
amounts payable upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such Shares are entitled upon such liquidation, dissolution or
winding up. If the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (a)(2) 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 was
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
---------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, or any combination thereof, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount of stock, securities, cash or any other property (payable in
kind), or any combination thereof, as the case may be, into which or for which
each share of Common Stock is changed or exchanged. If the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that was outstanding immediately
prior to such event.
Section 8. Redemption. The shares of Series A Preferred Stock shall not
----------
be redeemable. So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not 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
A-5
<PAGE>
Series A Preferred Stock unless the Corporation shall substantially concurrently
also purchase or acquire for consideration a proportionate number of shares of
Series A Preferred Stock.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
----
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences, privileges or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its President, and attested by its Secretary, this ____
day of ____________, 1997.
CONCENTRA MANAGED CARE, INC.
By:
-----------------------------------------
Donald J. Larson
President and Chief Executive Officer
ATTEST:
By:
----------------------
Richard A. Parr II
Secretary
A-6
<PAGE>
EXHIBIT B
---------
FORM OF RIGHT CERTIFICATE
-------------------------
CERTIFICATE NO. R- _____ Rights
NOT EXERCISABLE AFTER SEPTEMBER 28, 2007, 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.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS (AS DEFINED IN SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
CONCENTRA MANAGED CARE, 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 Rights Agreement, dated as of September 29, 1997 (the "RIGHTS AGREEMENT"),
between CONCENTRA MANAGED CARE, INC., a Delaware corporation (the "COMPANY"),
and ChaseMellon Shareholder Services, L.L.C. (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., Boston, Massachusetts
time, on September 28, 2007, at the Corporate Trust Office of the Rights Agent
(or at the office of its successor as Rights Agent), one one-thousandth (1/1000)
of a fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "PREFERRED SHARES"), of the Company, at a
purchase price of $170 per one one-thousandth (1/1000) 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-thousandths 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
September 29, 1997, 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-thousandths 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 that 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
B-1
<PAGE>
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 Corporate Trust
Office of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the Corporate Trust 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 Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be exchanged by the Company in whole or in part for
Preferred Shares or shares of the Company's common stock, par value $0.01 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-thousandth 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 entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Rights Agent.
B-2
<PAGE>
WITNESS the facsimile signatures of the proper officers of the Company and
its corporate seal.
Dated as of ______________, __________.
ATTEST: CONCENTRA MANAGED CARE, INC.
[SEAL]
By:
- -------------------------- -------------------------------------
Richard A. Parr II Donald J. Larson
Secretary President and Chief Executive Officer
Authentication:
This is one of the Right Certificates referred to in the within-mentioned Rights
Agreement.
ChaseMellon Shareholder Services, L.L.C., as Rights Agent
By:
--------------------------
Authorized Signature
B-3
<PAGE>
[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 as of ___________________, ____.
____________________________________
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 n
the United States.
________________________________________________________________________________
[To be executed if statement is correct]
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).
___________________________________
Signature
B-4
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
TO CONCENTRA MANAGED CARE, INC.:
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Right Certificate to purchase the Preferred Shares (or other
securities) issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares (or other securities) 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 as of ___________________, ____.
___________________________________
Signature
B-5
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
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.
________________________________________________________________________________
[To be executed if statement is correct]
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).
_______________________________________
Signature
________________________________________________________________________________
NOTICE
------
The signature in the foregoing Form of Assignment or Form of Election to
Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or
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.
B-6
<PAGE>
EXHIBIT C
---------
FORM OF
-------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On September 17, 1997, the Board of Directors of Concentra Managed Care,
Inc. (the "COMPANY"), authorized the issuance of one preferred share purchase
right (a "RIGHT") with respect to each outstanding share of common stock, $0.01
par value (the "COMMON SHARES"), of the Company. The rights were issued on
September 29, 1997 to the holders of record of Common Shares on that date. Each
Right entitles the registered holder to purchase from the Company one one-
thousandth of a share of Series A Junior Participating Preferred Stock, $.01 par
value (the "PREFERRED SHARES"), of the Company at a price of $170 per one one-
thousandth of a Preferred Share (the "PURCHASE PRICE"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"RIGHTS AGREEMENT") dated as of September 17, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "RIGHTS AGENT").
Detachment of Rights; Exercise. Initially, the Rights will attach to all
------------------------------
Common Share certificates representing outstanding shares and no separate Right
Certificate will be distributed. The Rights will separate from the Common
Shares and a Distribution Date will occur upon the earlier of (i) ten business
days following a public announcement that a person or group of affiliated or
associated persons (an "ACQUIRING PERSON") has acquired beneficial ownership of
15% or more of the outstanding Voting Shares (as defined in the Rights
Agreement) of the Company, or (ii) ten business days following the commencement
or announcement of an intention to commence a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Voting Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced, with respect to any of the Common
Shares outstanding on September 29, 1997, by the certificates representing such
Common Shares, (ii) the Rights will be transferred with and only with the Common
Shares, (iii) new Common Share certificates issued after September 29, 1997,
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and (iv) the surrender for
transfer of any certificates for Common Shares outstanding as of September 29,
1997, even without such notation, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "RIGHT CERTIFICATES") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 28, 2007 (the "FINAL EXPIRATION DATE"), unless the
Final Expiration Date is
<PAGE>
extended or the Rights are earlier redeemed or exchanged by the Company as
described below.
If a person or group were to acquire 15% or more of the Voting Shares of
the Company, each Right then outstanding (other than Rights beneficially owned
by the acquiring person which would become null and void) would become a right
to buy that number of Common Shares (or under certain circumstances, the
equivalent number of one one-thousandths of a Preferred Share) that at the time
of such acquisition would have a market value of two times the Purchase Price of
the Right.
If the Company were acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power were
sold, 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 Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
Preferred Shares. The dividend and liquidation rights, and the non-
----------------
redemption feature, of the Preferred Shares are designed so that the value of
one one-thousandth of a Preferred Share purchasable upon exercise of each Right
will approximate the value of one Common Share. The Preferred Shares issuable
upon exercise of the Rights will be non-redeemable and rank junior to all other
series of the Company's preferred stock. Each whole Preferred Share will be
entitled to receive a quarterly preferential dividend in an amount per share
equal to the greater of (i) $1.00 in cash, or (ii) in the aggregate, 1,000 times
the dividend declared on the Common Shares. In the event of liquidation, the
holders of the Preferred Shares will be entitled to receive a preferential
liquidation payment equal to the greater of (i) $1,000 per share, or (ii) in the
aggregate, 1,000 times the payment made on the Common Shares. In the event of
any merger, consolidation or other transaction in which Common Shares are
exchanged for or changed into other stock or securities, cash or other property,
each whole Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. Each whole Preferred Share shall be entitled to
1,000 votes on all matters submitted to a vote of the stockholders of the
Company, and Preferred Shares shall generally vote together as one class with
the Common Stock and any other capital stock on all matters submitted to a vote
of stockholders of the Company.
The offer and sale of the Preferred Shares issuable upon exercise of the
Rights will be registered with the Securities and Exchange Commission and such
registration will not be effective until the Rights become exercisable.
Antidilution and Other Adjustments. The number of one one-thousandths of a
----------------------------------
Preferred Share or other securities or property issuable upon exercise of the
Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
The number of outstanding Rights and the number of one one-thousandths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the
<PAGE>
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
Exchange Option. At any time after the acquisition by a person or group of
---------------
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Voting Shares of the Company and before the acquisition by a person
or group of 50% or more of the outstanding Voting Shares of the Company, the
Board of Directors may, at its option, issue Common Shares in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (other than Rights owned by such person or group which would
become null and void) at an exchange ratio of one Common Share (or one one-
thousandth of a Preferred Share) for each two Common Shares for which each Right
is then exercisable, subject to adjustment.
Redemption of Rights. At any time prior to the first public announcement
--------------------
that a person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of the Company may redeem all
but not less than all the then outstanding Rights at a price of $0.001 per Right
(the "REDEMPTION PRICE"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
No Rights as Stockholder. 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.
Amendment of Rights. 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,
including an amendment to extend the Final Expiration Date, and, provided a
Distribution Date has not occurred, to extend the period during which the Rights
may be redeemed, except that after the first public announcement that a person
or group has become the beneficial owner of 15% or more of the outstanding
Voting Shares, no such amendment may materially and adversely affect the
interests of the holders of the Rights.
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.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
October 1, 1997. A copy of the Rights Agreement is available free of charge
from the Company.
-----------------------------
