SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 24, 1998
MAXICARE HEALTH PLANS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12024 95-3615709
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1149 South Broadway Street
Los Angeles, California
(Address of principal executive offices)
90015
(Zip Code)
(213) 765-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 24, 1998, the Board of Directors of
Maxicare Health Plans, Inc. (the "Corporation") declared a
dividend distribution of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value
$0.01 per share (the "Common Shares"), of the Corporation. The
dividend is payable to the stockholders of record on March 16,
1998 (the "Record Date"), and with respect to Common Shares
issued thereafter, until the Distribution Date (as defined below)
and, in certain circumstances, with respect to Common Shares
issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered
holder to purchase from the Corporation one five-hundredth of a
share of Series B Preferred Stock, $0.01 par value (the
"Preferred Shares"), of the Corporation at a price of $45.00 per
one five-hundredth 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")
between the Corporation and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent"), dated as of
February 24, 1998.
Initially, the Rights will be attached to all
certificates representing Common Shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
separate from the Common Shares upon the earliest to occur of (i)
the date of a public announcement that, without the prior consent
of a majority of the Disinterested Directors (as defined below),
a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the
Board may determine) following the commencement or announcement
of an intention to make a tender or exchange offer, the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person". The
date that a person or group announces publicly that it has become
an Acquiring Person is the "Shares Acquisition Date". Any current
holder that has previously advised the Corporation that it holds
in excess of 15% of the Common Shares has been "grandfathered"
with respect to its current position, including an allowance for
certain small incremental additions thereto.
"Disinterested Directors" are "Continuing Directors"
who are not officers or employees of the Corporation and who are
<PAGE>
not Acquiring Persons or their affiliates, associates or
representatives of any of them, or any person who was directly or
indirectly proposed or nominated as a director of the Corporation
by an Acquiring Person or certain related parties and "Continuing
Directors" are the members of the Board of Directors as of
February 24, 1998 or persons recommended to succeed a Continuing
Director by a majority of Continuing Directors.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender or transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of the Summary of Rights Agreement being attached thereto,
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 to each
initial record holder of certain Common Shares issued after the
Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on February 23,
2008, unless earlier redeemed by the Corporation as described
below.
In the event that any person becomes an Acquiring
Person (except pursuant to a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms which a
majority of the Disinterested Directors determines to be adequate
and in the best interests of the Corporation and its
stockholders, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive
upon exercise Common Shares or one five-hundredth of a share of
Preferred Shares (or, in certain circumstances, other securities
of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence of
the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
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beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation consolidates with, or
merges into, an Acquiring Person, or an affiliate or associate
thereof, or any person or entity in which such Acquiring Person,
affiliate or associate has an interest or which is acting in
concert with such Acquiring Person, affiliate or associate (an
"Interested Stockholder"), or any other entity (if all holders of
Common Shares are not treated alike in such transaction), (ii) an
Interested Stockholder or any other entity (if all holders of
Common Shares are not treated alike in such transaction)
consolidates with, or merges into the Corporation (other than, in
the case of either transaction described in (i) and (ii) above,
and certain reorganization transactions), or (iii) the
Corporation sells or otherwise transfers (in one transaction or a
series of transactions) 50% or more of the assets or earning
power of the Corporation to an Interested Stockholder or to any
other entity (if all holders of Common Shares are not treated
alike in such transaction), proper provision shall be made so
that each holder of a Right (except Rights which previously have
been voided as set forth below) shall thereafter have the right
(the "Flip- Over Right") to receive, upon exercise, common shares
of the acquiring or surviving company (or, in the event there is
more than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power transferred)
having a value equal to two times the exercise price of the
Right.
The Purchase Price payable, and the number of Preferred
Shares, Common Shares or other securities issuable, upon exercise
of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the Purchase Price
payable are also subject to adjustment in the 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.
<PAGE>
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable, except at the election of the
Corporation for Common Shares. Each Preferred Share will be
entitled to a dividend per share of 500 times the dividend
declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled (after the
payment of any liquidation preference on any other series of
preferred stock) to $100 per share, plus the holders of the
Preferred Shares and the holders of the Common Shares will share
the remaining assets in the ratio of 500 to 1 (as adjusted) for
each Preferred Share and Common Share so held, respectively.
Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 500 times the amount received
per Common Share. These rights are protected by customary
antidilution provisions.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
one five-hundredths or integral multiples of one five-hundredths
of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depository receipts) and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise or if the Preferred Shares are not traded,
the market price of the Common Shares on such date.
At any time after a person becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or
more of the Common Shares, the Board of Directors of the Company
(with the approval of a majority of the Disinterested Directors)
may exchange the Rights (other than the Rights owned by the
Acquiring Person or its affiliates and associates, which shall
have become void) at an exchange ratio of one Common Share per
Right (subject to adjustment). The Board of Directors can
substitute one five-hundredths of a Preferred Share for some or
all of the Common Shares per Right.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors (with the
approval of a majority of the Disinterested Directors).
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
<PAGE>
redemption is in connection with a merger or other business
combination transaction or series of transactions involving the
Corporation in which all holders of Common Shares are treated
alike but not involving an Acquiring Person or its affiliates or
associates and provided further that this redemption right shall
not exist for 180 days following the Shares Acquisition Date
under certain circumstances.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Corporation (with the
approval of a majority of the Disinterested Directors) prior to
the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten
or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, Exhibit 4.13 hereto, which is
hereby incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(b) Exhibits.
3.5 Certificate of Incorporation, as amended and
restated, which includes, Restated Certificate of
Incorporation of Healthcare USA Inc. filed with the
Office of the Secretary of State of Delaware on
July 19, 1985, Certificate of Merger of MHP
Acquisition Corp. into Healthcare USA Inc. filed
with the Office of the Secretary of State of
Delaware on September 13, 1986, Certificate of
Change of Registered Agent and Registered Office
filed with the Office of the Secretary of State of
Delaware on August 17, 1987, Certificate of Merger
Merging Maxicare Health Plans, Inc. with and into
Healthcare USA Inc. (including as Exhibit A thereto
the Restated Certificate of Incorporation of
Healthcare USA Inc.) filed with the Office of the
Secretary of State of Delaware on December 5, 1990,
Certificate of Correction filed
<PAGE>
with the Office of the Secretary of State of
Delaware on May 17, 1991, Certificate of Ownership
and Merger Merging HealthAmerica Corporation into
Maxicare Health Plans, Inc. filed with the Office
of the Secretary of State of Delaware on November
22, 1991, Certificate of Amendment of Restated
Certificate of Incorporation of Maxicare Health
Plans, Inc. filed with the Office of the Secretary
of State of Delaware on March 9, 1992, Certificate
of Ownership and Merger Merging HCS Computer, Inc.
into Maxicare Health Plans, Inc. filed with the
Office of the Secretary of State of Delaware on
November 6, 1992, and Certificate of Designation of
Series B Preferred Stock of Maxicare Health Plans,
Inc. filed with the Office of the Secretary of
State of Delaware on February 27, 1998.
4.13 Rights Agreement, dated as of February 24, 1998,
between Maxicare Health Plans, Inc. and American
Stock Transfer & Trust Company, as Rights Agent,
which includes, as Exhibit A thereto, the
Certificate of Designation of Series B Preferred
Stock of Maxicare Health Plans, Inc., as Exhibit B
thereto, the Form of Right Certificate, Form of
Assignment, and Form of Election to Purchase, and
as Exhibit C thereto, the Summary of Rights
Agreement. Pursuant to the Rights Agreement, Right
Certificates will not be mailed until after a
Shares Acquisition Date (as defined in the Rights
Agreement) or ten days after a person commences or
announces its intention to commence an offer if,
upon consummation thereof, such person would become
an Acquiring Person (as defined in the Rights
Agreement).
99.7 Press Release dated February 24, 1998 announcing
the adoption of the Rights Plan.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
MAXICARE HEALTH PLANS, INC.
(Registrant)
By: /s/ Richard A. Link
Richard A. Link
Chief Financial Officer
Date: March 12, 1998
RESTATED
CERTIFICATE OF INCORPORATION
OF
HEALTHCARE USA INC.
The undersigned, for the purposes of restating the
Certificate of Incorporation of Healthcare USA Inc. (originally
incorporated under the name Great Western Hospital Corp.),
originally filed with the Secretary of State of the State of
Delaware on January 5, 1981, do execute this Restated Certificate
of Incorporation pursuant to Sections 245 of the Delaware General
Corporation Law of the State of Delaware ("General Corporation
Law") and do hereby certify as follows:
FIRST: The name of the Corporation is HEALTHCARE USA
INC.
SECOND: Its registered office in the State of Delaware
is located at 306 South State Street in the City of Dover, County
of Kent. The name and address of its registered agent is United
States Corporation Company, 306 South State Street, Dover,
Delaware 19901.
THIRD: The nature of the business or objects purposes
to be transacted, promoted or carried on are:
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is Twenty-six Million
(26,000,000), Twenty-five Million (25,000,000) of which shall be
shares of Common Stock of the par value of One Cent ($0.01) each,
and One Million (1,000,000) of which shall be shares of Preferred
Stock of the par value of One Dollar ($1.00) each.
The designations, powers, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the
shares of each class are as follows:
PREFERRED STOCK
The Preferred Stock shall be of the par value of One
Dollar ($1.00) per share and may be issued from time to time in
one or more series, each of such series to have such voting
powers, designations, preferences, and relative participating,
optional or other special rights, and the qualifications,
limitations or restrictions thereof, as are stated and expressed
<PAGE>
herein or in a resolution or resolutions, providing for the
issuance of such series, adopted by the Board of Directors is
hereby expressly empowered, subject to the provisions of this
ARTICLE FOURTH, to provide for the issuance of the Preferred
Stock from time to time in series and to fix by resolution or
resolutions providing for the issuance of such series:
(a) The number of shares to constitute such series and
the designation thereof;
(b) The voting rights, full or limited, if any, to
which holders of shares of any series of Preferred Stock my be
entitled;
(c) The dividend rate of the shares of such series, and
whether or not such dividends shall be cumulative;
(d) Whether or not the shares of such series shall be
redeemable and, if redeemable, the redemption price and the terms
and conditions thereof;
(e) The amount, if any, which the shares of any such
series shall be entitled to receive, before any distribution or
payment shall be made to holders of the Common Stock, in the
event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntarily,
or of any proceedings resulting in any distribution of all, or
substantially all, of its assets to its stockholders;
(f) Whether or not the shares of such series shall be
subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares and, if such
funds are established, the annual amount thereof and the terms
and provisions relative to the operation thereof;
(g) Whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of any other class
or classes of any other series of the same or any other class of
stock of the Corporation and, if convertible, the conversion
price or prices or rate or rates of conversion or exchange and
terms of adjustments, if any, upon such conditions as shall be
stated in said resolution or resolutions; and
(h) Such other designations, preferences and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions thereof as it may
deem advisable and shall be stated in said resolution or
resolutions.
COMMON STOCK
The Common Stock shall have a par value of One Cent
($0.01) per share. Upon any liquidation, dissolution or winding
<PAGE>
up of the Corporation, and after payment, if required, shall have
been made in full to the holders of any share of Preferred Stock
which may be issued and outstanding, pursuant to the terms upon
which such Preferred Stock was issued, the holders of the Common
Stock shall be entitled to share pro rata in the distribution of
any and all assets remaining to be paid or distributed, and the
holders of the Preferred Stock shall not be entitled to share
therein. Subject to any rights of the Preferred Stock, dividends
may be paid upon the Common Stock, as and when declared by the
Board of Directors, out of any funds or assets legally available
therefor.
FIFTH: In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is expressly
authorized;
To make, alter or repeal the By-Laws of the Corporation.
To authorize and cause to be executed mortgages and
liens upon the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it
was created.
When and as authorized by the affirmative vote of the
holders of a majority of the stock issued and outstanding having
voting power given at a Stockholders' meeting, duly called for
that purpose, or when authorized by the written consent of the
holders of a majority of the voting stock issued and outstanding,
to sell, lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock
in, and/or securities of, any other corporation or corporations,
as its Board of Directors shall deem expedient and for the best
interests of the Corporation.
SIXTH: Meetings of Stockholders may be held outside the
State of Delaware, if the By-Laws so provide. The books of the
Corporation may be kept (subject to any provision contained in
the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon Stockholders
herein are granted subject to this reservation.
EIGHTH: Whenever a compromise or arrangement is
<PAGE>
proposed between this Corporation and its creditors or any class
of them and/or between this Corporation and its Stockholders or
any class of them, any court of equitable jurisdiction within the
State of Delaware may, on the application in a summary way of
this Corporation or of any creditor or Stockholder thereof or on
the application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of
the Stockholders or class of Stockholders of this Corporation, as
the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
Stockholders or class of Stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class or creditors, and/or of the Stockholders or
class of Stockholders, of this Corporation, as the case may be,
and also on this Corporation.
NINTH: 1. In addition to whatever stockholder vote may
be required by law, the affirmative vote or consent of the
holders of fifty-one percent (51%) of all shares (as defined in
subparagraph 2(c) of this ARTICLE NINTH) of stock of the
Corporation [but without considering as outstanding and not
counting the vote of any shares owned beneficially, directly or
indirectly, by any other entity (as defined in subparagraph 2(a)
of this ARTICLE NINTH)], entitled to vote in elections of
directors, considered for the purposes of this ARTICLE NINTH as
one class, shall be required for the adoption or authorization
of:
(A) a business combination (as defined in subparagraphs
2(d)(i), 2(d)(ii) and 2(d)(iii) of this ARTICLE NINTH) with such
other entity if, (i) as of the record date for the determination
of Stockholders entitled to notice thereof and to vote thereon or
consent thereto, or (ii) immediately prior thereto, such other
entity is;
(B) a business combination (as defined in subparagraph
2(d)(iv) of this ARTICLE NINTH) if (i) on the record date for
determination of stockholders entitled to notice thereof and to
vote thereon or consent thereto, or (ii) immediately prior
thereto, such other entity is:
the beneficial owner (as defined in subparagraph 2(b) of this
ARTICLE NINTH), directly or indirectly, of twenty-five percent
(25%) or more of the outstanding shares of stock of the
<PAGE>
Corporation entitled to vote in elections of directors considered
for the purpose of this ARTICLE NINTH as one class; provided that
such fifty-one percent (51%) voting requirement shall not be
applicable if:
(a) The cash or fair market value of other
consideration to be received per share by common
Stockholders of the Corporation in such business
combination is at least an amount equal to that sum
which bears the same or greater percentage relationship
to the market price of the Corporation's Common Stock
immediately prior to the announcement of such business
combination as the highest per share price (including
brokerage commissions, dealer manager and/or soliciting
dealers' fees) which such other entity has theretofore
paid for any of the shares of the Corporation's Common
Stock already owned by it bears to the market price of
the Common Stock of the Corporation immediately prior
to (i) the announcement of an intention by the other
entity to acquire shares of the Corporation's Common
Stock, or (ii) the commencement of acquisition of the
Corporation's Common Stock by such other entity,
whichever occurs first;
(b) The cash or fair market value of other
consideration to be received per share by Common
Stockholders of the Corporation in such business
combination (i) is not less than the highest per share
price (including brokerage commissions, dealer manager
and/or soliciting dealers' fees) paid by such other
entity in acquiring any of its holdings of the
Corporation's Common Stock, and (ii) is not less than
the aggregate earnings per share of Common Stock of the
Corporation for the four full consecutive fiscal
quarters immediately preceding the record date for
solicitation of votes on such business combination,
multiplied by the then average price earnings multiple
(if any) of such other entity for the twenty trading
days immediately prior to said record date as reported
in The Wall Street Journal, or if not so reported, then
as would be customarily computed and reported in the
financial community;
(c) After such other entity has acquired a
twenty-five percent (25%) or greater interest and prior
to the consummation of such business combination, (i)
such other entity shall have taken steps to ensure that
the Corporation's Board of Directors included at all
times representation by continuing director(s) (as
defined in subparagraph 2(e) of this ARTICLE NINTH)
proportionate to the stockholdings of the Corporation's
public common Stockholders not affiliated with such
other entity (with a continuing director to occupy any
<PAGE>
resulting fractional board position); (ii) there shall
have been no reduction in the rate of dividends payable
on the Corporation's Common Stock except as may have
been approved by the unanimous vote of all the
directors; (iii) such other entity shall not have
acquired any newly issued shares of stock, directly or
indirectly, from the Corporation (except upon
conversion of convertible securities acquired by it
prior to obtaining a twenty-five percent (25%) or
greater interest or as a result of a pro rata stock
dividend or stock split); and (iv) such other entity
shall not have acquired any additional shares of the
Corporation's outstanding Common Stock except as a part
of the transaction which results in such other entity
acquiring its twenty-five percent (25%) or greater
interest;
(d) Such other entity shall not have (i)
received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial
assistance or tax credits provided by the Corporation,
or (ii) made any major change in the Corporation's
business or equity capital structure without the
unanimous approval of all the directors, in either case
prior to the consummation of such business combination;
and
(e) A proxy statement responsive to the
requirements of the Securities Exchange Act of 1934
shall be mailed to public Stockholders of the
Corporation for the purpose of soliciting Stockholder
approval of such business combination and shall contain
in the forepart thereof, in a prominent place, any
recommendations as to the advisability (or
inadvisability) of the business combination which the
continuing directors, or any of them, may choose to
state and, if deemed advisable by a majority of the
continuing directors, an opinion of a reputable
investment banking firm as to the fairness (or lack
thereof) of the terms of such business combination from
the point of view of the remaining public Stockholders
of the Corporation and the Corporation (such investment
banking firm to be selected by a majority of the
continuing directors and to be paid a reasonable fee
for their services by the Corporation upon receipt of
such opinion).
The provisions of this ARTICLE NINTH shall also
apply to a business combination with any other entity
which at any time has been the beneficial owner, directly
or indirectly, of more than twenty-five percent (25%) of
<PAGE>
the outstanding shares of stock of the corporation
entitled to vote in elections of directors considered for
the purposes of this ARTICLE NINTH as one class,
notwithstanding the fact that such other entity has
reduced its stockholdings below twenty-five percent (25%)
of (i) as of the record date for the determination of
stockholders entitled to notice of and to vote on or
consent to the business combinations, or (ii) immediately
prior to such business combination, such other entity is
an "affiliate" of the Corporation (as defined in
subparagraph 2(a) of this ARTICLE NINTH).
2. As used in this ARTICLE NINTH:
(a) the term "other entity" shall include
any corporation, person or other entity and any other
entity with which it or its "affiliate" or "associate" (as
defined in this subparagraph 2(a)) has any agreement,
arrangement or understanding, directly or indirectly, for
the purpose of acquiring, holding, voting or disposing of
stock of the Corporation, or which is an "affiliate" or
"associate" as those terms are defined in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect on December 30, 1980,
together with the successors and assigns of such persons
which acquired, directly or indirectly, shares of the
Corporation's Common Stock in any transaction or series of
transactions not involving a public offering of the
Corporation's stock within the meaning of the Securities
Act of 1933;
(b) the other entity (as defined in
subparagraph 2(a) of this ARTICLE NINTH) shall be deemed
to be the beneficial owner of any shares of stock of the
Corporation which the other entity has the right to
acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise;
(c) the outstanding shares of any class of
stock of the Corporation shall include shares deemed owned
through application of clause (b) above but shall not
include any other shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise;
(d) the term "business combination" shall
include:
(i) any merger or consolidation of
the Corporation with or into any other entity;
(ii) any sale or lease or exchange or
<PAGE>
other disposition (in one transaction or a series of
related transactions) of all or substantially all of
the assets of the Corporation;
(iii) any sale or lease or exchange or
other disposition (in one transaction or a series of
related transactions) to the Corporation or any
subsidiary of the Corporation of any assets (except
assets having an aggregate fair market value of less
than $1,000,000) in exchange for voting securities (or
securities convertible into or exchangeable for voting
securities, or options, warrants or rights to purchase
voting securities or securities convertible into or
exchangeable for voting securities) of the Corporation
or any subsidiary of the Corporation; or
(iv) any reclassification of
securities, recapitalization or other transaction
designed to decrease the number of holders of the
Corporation's voting securities;
(e) the term "continuing director" shall
mean a person who was a member of the Board of Directors
of the Corporation elected by the public Stockholders
prior to the time that such other entity acquired in
excess of ten percent (10%) of the stock of the
Corporation entitled to vote in the election of directors,
or a person recommended to succeed a continuing director
by a majority of continuing directors;
(f) for purposes of subparagraphs 1(a) and
1(b) of this ARTICLE NINTH, the term "fair market value or
other consideration shall be as determined in good faith
by the Board of Directors of the Corporation and concurred
in by a majority of continuing directors; and
(g) for the purpose of subparagraphs 1(a)
and 1(b) of this ARTICLE NINTH the term "other
consideration to be received" shall include Common Stock
of the Corporation retained by its existing public
stockholders in the event of a business combination with
such other entity in which the Corporation is the
surviving corporation.
3. A majority of the continuing directors shall
have the power and duty to determine for the purposes of
this ARTICLE NINTH, on the basis of information known to
them, whether (a) such other entity beneficially owns
twenty-five percent (25%) or more of the outstanding
shares of stock of the Corporation entitled to vote in
election of directors, (b) the other entity (as defined in
subparagraph 2(a) of this ARTICLE NINTH) is an "affiliate"
<PAGE>
or "associate" (as defined in subparagraph 2(a) of this
ARTICLE NINTH) of another entity, (c) the other entity (as
defined in subparagraph 2(a) of this ARTICLE NINTH) has an
agreement, arrangement or understanding with another
entity, or (d) the assets being acquired by the
Corporation, or any subsidiary thereof, have an aggregate
fair market value of less than $1,000,000.
4. Nothing contained in this ARTICLE NINTH shall
be construed to relieve the other entity (as defined in
subparagraph 2(a) of this ARTICLE NINTH) from any
fiduciary obligation imposed by law.
5. Notwithstanding any other provision of the
Certificate of Incorporation of this Corporation, no
amendment to the Certificate of Incorporation of this
corporation shall amend, alter, change or repeal any of
the provisions of this ARTICLE NINTH, unless the amendment
effecting such amendment, alteration, change or repeal
shall receive the affirmative vote or consent of the
holders of fifty-one percent (51%) of all outstanding
shares of stock of the Corporation [but without
considering as outstanding and not counting the vote of
shares owned beneficially, directly or indirectly, by any
other entity (as defined in subparagraph 2(a) of this
ARTICLE NINTH)] entitled to vote in election of directors,
considered for the purposes of this paragraph of this
ARTICLE NINTH as one class; provided that this paragraph
of this ARTICLE NINTH shall not apply to, and such fifty-
one percent (51%) vote or consent shall not be required
for, any amendment, alteration, change or repeal
unanimously recommended to the Stockholders by the Board
of Directors of the Corporation if all of such directors
are persons who would be eligible to serve as "continuing
directors" within the meaning of subparagraph 2(e) of this
ARTICLE NINTH.
TENTH: Special meetings of the Stockholders may
be called by a majority of the members of the Board of
Directors, or by the persons who hold not less than thirty
percent (30%) of the outstanding shares of any class of
stock of the Corporation and entitled to vote on any
proposal to be submitted at said special meeting.
ELEVENTH: (a) The number of directors of the
Corporation shall be the number fixed by, or in the manner
provided in, the By-Laws. The Board of Directors shall be
divided into three classes as nearly equal in number as
may be, with the term of office of one class expiring each
year. At the first annual meeting of Stockholders,
directors of the first class shall be elected to hold
office for a term expiring at the next succeeding annual
<PAGE>
meeting, directors of the second class shall be elected to
hold office for a term expiring at the second succeeding
annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third
succeeding annual meeting. At each annual meeting of
Stockholders after the first meeting, successors to the
directors whose terms shall then expire shall be elected
to hold office for terms expiring at the third succeeding
annual meeting, except that any director elected to a
directorship newly created since the last annual meeting
shall hold office for the same term as the other directors
of the class to which such director has been assigned.
When the number of directors is changed, any newly created
directorships or any decrease in directorships shall be so
assigned among the classes by a majority of the directors
then in office, though less than a quorum, or by a sole
remaining director, so as to make all classes as nearly
equal in number as may be possible. To the extent of any
inequality within the limits of the foregoing, the class
or classes caused to have the greatest or greater number
of directorships shall be the class or classes then having
the last date or the later dates for the expiration of its
or their terms. Any vacancy occurring among the directors
may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining
director, and each director elected to fill such vacancy
shall hold office for the unexpired term in respect of
which such vacancy occurred; (b) directors shall be
subject to removal only for cause; and (c) directors need
not be elected by written ballot unless otherwise provided
in the By-Laws.
The affirmative vote of the holders of the two-
thirds (2/3) of the outstanding shares of any class of
stock of the Corporation entitled to vote in the election
of directors shall be required to amend this ARTICLE
ELEVENTH.
IN WITNESS WHEREOF, the undersigned hereby
certify that this Restated Certificate of Incorporation
was duly adopted in accordance with the provisions of
Sections 245 of the General Corporation Law; hereby
certify that this Restated Certificate of Incorporation
only restates and integrates and does not further amend
the provisions of the Corporation's Certificate of
Incorporation as theretofore amended or supplemented, and
that there is no discrepancy between those provisions and
the provisions of this Restated certificate of
Incorporation; and hereby execute and acknowledge the
foregoing Restated Certificate of Incorporation on this
10th day of July, 1985.
<PAGE>
/s/ Harlan W. Loomas
Harlan W. Loomas,
Chief Executive Officer
ATTEST:
/s/ Charles S. Fiedler
Charles S. Fiedler,
Assistant Secretary
<PAGE>
CERTIFICATE OF MERGER OF
MHP ACQUISITION CORP.
INTO
HEALTHCARE USA INC.
The undersigned corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name of the state of
Incorporation of each of the constituent corporations of the
merger is as follows:
Name State of Incorporation
HealthCare USA Inc. Delaware
MHP Acquisition Corp. Delaware
SECOND: That a plan and agreement of merger between
the parties to the merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations
in accordance with the requirements of subsection (c) of Section
251 of the General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of
the merger is HealthCare USA Inc.
FOURTH: The Restated Certificate of Incorporation of
the surviving corporation, with such amendments as are effected
by the merger, shall be as follows:
FIRST: The name of the corporation is
HealthCare USA Inc.
SECOND: The address of the registered office
of the corporation in the State of Delaware is 410 South
State Street, in the City of Dover, County of Kent. The
name of the registered agent of the corporation at such
address is Incorporating Services, Ltd.
THIRD: The purpose of the corporation is to
engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of the State of Delaware.
<PAGE>
FOURTH: The total number of shares of stock
which the corporation is authorized to issue is one
hundred thousand (100,000) shares of common stock, having
a par value of one cent ($0.01) per share.
FIFTH: The business and affairs of the
corporation shall be managed by the board of directors,
and the directors need not be elected by ballot unless
required by the by laws of the Corporation.
SIXTH: In furtherance and not in limitation
of the powers conferred by the laws of the State of
Delaware, the board of directors is expressly authorized
to adopt, amend or repeal the by-laws.
SEVENTH: The corporation reserves the right
to amend and repeal any provision contained in this
Certificate of Incorporation in the manner prescribed by
the laws of the State of Delaware. All Rights herein
conferred are granted subject to this reservation.
FIFTH: That the executed plan and agreement of merger
is on file at the principal place of business of the surviving
corporation. The address of the principal place of business of
the surviving corporation is 701 South Parker Street, Suite 6000,
Orange, California 92660.
SIXTH: That a copy of the plan and agreement of
merger will be furnished by the surviving corporation, on request
and without cost to any stockholder of any constituent
corporation.
SEVENTH: The effective time ("Effective Time") of the
merger shall be 12.01 A.M. Eastern Daylight Time, on October 1,
1986.
IN WITNESS WHEREOF, the undersigned, being the President
and Secretary of HealthCare USA Inc., have caused this
Certificate of Merger to be executed this 30th day of September,
1986.
HEALTHCARE USA INC.
BY /s/ Ernest Park
President
ATTEST:
By: /s/ Charles S. Fiedler
Secretary
<PAGE>
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
* * * * *
HEALTHCARE USA INC., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is
Incorporating Services. Ltd. and the present registered office of
the corporation is in the county of Kent.
The Board of Directors of HEALTHCARE USA INC.
adopted the following resolution on the 1st day of October, 1986.
Resolved, that the registered office of HEALTHCARE
USA INC. in the state of Delaware be and it hereby is
changed to Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of this
corporation be and the same is hereby withdrawn, and THE
CORPORATION TRUST COMPANY, shall be and is hereby
constituted and appointed the registered agent of this
corporation at the address of its registered office.
IN WITNESS WHEREOF: HEALTHCARE USA INC. has caused
this statement to be signed by Bruce Pollack, its President and
attested by Alan Bloom, its Secretary this 13th day of July,
1987.
By: /s/ Bruce Pollack
Bruce Pollack, President
ATTEST:
By: /s/ Alan Bloom
Alan Bloom, Secretary
<PAGE>
CERTIFICATE OF MERGER
MERGING
MAXICARE HEALTH PLANS, INC.
WITH AND INTO
HEALTHCARE USA INC.
(Pursuant to Sections 252 and 303
of the General Corporation Law
of the State of Delaware.)
The undersigned corporation, organized and existing
under and by virtue of the General Corporation Law of the State
of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each
of the constituent corporations of the merger is as follows:
Names States of Incorporation
MAXICARE HEALTH PLANS, INC. California
HEALTHCARE USA INC. Delaware
SECOND: An Agreement and Plan of Merger has been
approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the
requirements of Sections 252 and 303 of the General Corporation
Law of the State of Delaware.
THIRD: Provision for the merger of the above referenced
corporations is contained in an order date August 31, 1990 of the
United States Bankruptcy Court for the Central District of
California in In re Family Health Services, Inc., et al., Case
<PAGE>
Nos. SA 89-01549 JW, SA 89-01550 JW through SA 89-01594 JW, SA
89-02535 JW and SA 89-02536 JW.
FOURTH: The name of the surviving corporation is
Healthcare USA Inc.
FIFTH: Upon the merger becoming effective, the
Restated Certificate of Incorporation of Healthcare USA Inc., the
surviving corporation, shall be amended in its entirety to read
as set forth in Exhibit A.
SIXTH: The executed Agreement and Plan of Merger is on
file at the principal place of business of the surviving
corporation. The address of the principal place of business of
the surviving corporation is 5250 West Century Boulevard, Los
Angeles, California 90045.
SEVENTH: A copy of the executed Agreement and Plan of
Merger will be furnished by the surviving corporation on request
and without cost to any shareholder of any constituent
corporation.
HEALTHCARE USA INC.
By: /s/ Robert S. Amador
Robert S. Amador
President
Attest:
By: /s/ Alan D. Bloom
Alan D. Bloom
Secretary
<PAGE>
EXHIBIT A
RESTATED
CERTIFICATE OF INCORPORATION
OF
HEALTHCARE USA INC.
HealthCare USA Inc., a corporation organized and
existing under the laws of the State of Delaware hereby certifies
as follows:
1. The name of the corporation is HealthCare USA Inc.
(the "Corporation"). The Corporation was originally incorporated
under the name of Greatwest Hospitals, Inc. The original
Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on January 5,
1981.
2. This Restated Certificate of Incorporation restates
and integrates and further amends the provisions of the
Certificate of Incorporation of this Corporation by:
Amending Article FIRST;
Amending Article SECOND;
Amending Article THIRD;
Amending Article FOURTH;
Deleting Article FIFTH and adding a new Article FIFTH;
Deleting Article SIXTH and adding a new Article SIXTH;
Deleting Article SEVENTH and adding a new Article
SEVENTH;
Deleting Article EIGHTH and adding a new Article EIGHTH;
Deleting Article NINTH and adding a new Article NINTH;
Deleting Article TENTH and adding a new Article TENTH;
and
Deleting Article ELEVENTH and adding a new Article
ELEVENTH.
3. The text of the Restated Certificate of
Incorporation as heretofore amended or supplemented is hereby and
further amended and restated to read in its entirety as follows:
FIRST: Name. The name of the Corporation is
Maxicare Health Plans, Inc.
SECOND: Registered Office. The address of the
Corporation's registered office in the State of Delaware is 1209
<PAGE>
Orange Street Corporation Trust Center in the City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: Purpose. The purpose of the Corporation is
to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State
of Delaware (the "GCL").
FOURTH: Capital Stock.
A. Authorized Capital Stock. The total number
of shares of all classes of capital stock which the Corporation
shall have the authority to issue is Eighteen Million
(18,000,000) shares with a par value of $0.01 per share. All
such shares are of one class and are shares of Common Stock (the
"Common Stock").
B. Voting Rights. Each holder of shares of
Common Stock shall be entitled to one vote in respect of each
share of such stock held by him or her of record.
C. Non-voting Capital Stock. This Corporation
shall not authorize or issue any non-voting capital stock.
FIFTH: Board of Directors.
A. Number of Directors. The number of directors
which shall constitute the board of directors of the Corporation
(the "Board") shall be fixed in accordance with the Bylaws of the
Corporation.
B. Classification of Board.
(i) The Board shall be divided into three
classes, Class I, Class II and Class III. Each class shall have
as nearly equal in number of directors as possible, with the term
of office of the directors of one class expiring each year;
provided however, that the directors initially serving to Class I
shall serve a term ending on the date of the annual meeting next
following the end of the calendar year 1991, the directors
initially serving in Class II shall serve a term ending on the
date of the second annual meeting next following the end of the
calendar year 1991, and the directors initially serving in Class
III shall serve for a term ending on the date of the third annual
meeting next following the end of the calendar year 1991. Except
<PAGE>
as specified in Section C of this Article FIFTH, below, each
director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which the class of
directors of which such director is a member was elected.
Election of directors need not be by written ballot unless the
Bylaws of the Corporation shall otherwise provide.
(ii) Upon any change in the authorized
number of directors, the Board shall apportion any newly created
directorships to, or reduce the number of directorships in, such
class or classes as shall, so far as possible, equalize the
number of directors in each class. If consistent with the rule
that the three classes of directors shall be as nearly equal in
number of directors as possible, the Board shall allocate any new
directorships to the available class whose term of office is due
to expire at the earliest date following such allocation.
(iii) Notwithstanding any provision of this
Section B of this Article FIFTH, each director shall serve for a
term continuing until the annual meeting of the stockholders at
which the term of the class to which he was elected expires and
until his successor is elected and qualified or until his earlier
death, resignation or removal.
C. Vacancies on Board. Any vacancies occurring
in the Board for any reason, and any newly created directorships
resulting from any increase in the number of directors, may be
filled by the Board, acting by a majority of the directors then
in office, although less than a quorum or by the stockholders,
and any director so chosen shall hold office until the next
election of the class for which such director shall have been
chosen and until his successor shall be elected and qualified.
D. Removal of Directors. A director may be
removed by the holders of a majority of the shares then entitled
to vote at an election of directors, but only for cause. Except
as may otherwise be provided by law, such cause for removal shall
exist only if the director has been (i) convicted of a felony by
a court of competent jurisdiction and such conviction is no
longer subject to direct appeal, (ii) adjudged by a court of
competent jurisdiction to be liable for gross negligence or
misconduct in the performance of his duty to the Corporation in a
matter of substantial importance to the Corporation, and such
adjudication is no longer subject to direct appeal, or (iii)
adjudged by a court of competent jurisdiction to be an
incompetent, with the appointment of a guardian to administer the
director's affairs, and such adjudication is no longer subject to
direct appeal.
SIXTH: Amendment of Bylaws. The Board is expressly
authorized to adopt, amend or repeal the Bylaws of the
Corporation.
<PAGE>
SEVENTH: Elimination of Certain Liability of Directors.
A director of this Corporation shall not be liable to this
Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, to the fullest extent permitted
by Section 102(b) of the GCL as it currently exists or as it may
hereafter be amended. No amendment to, or modification or repeal
of, this Article SEVENTH shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation
for or with respect to acts or omissions of such director
occurring prior to such amendment, modification or repeal.
EIGHTH: Indemnification and Insurance. The
Corporation shall indemnify its directors, officers, employees
and agents in accordance with the provisions of this Article
EIGHTH.
A. Right to Indemnification. The Corporation
shall indemnify, to the fullest extent now or hereafter permitted
under the GCL, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action brought by
or in the right of the Corporation, by reason of the fact that on
or after March 16, 1989, he or she is or was a director, officer,
employee or agent of the Corporation (or was a director, officer,
employee or agent of Maxicare Health Plans, Inc., a California
corporation ("MHP"), prior to the merger of MHP into the
Corporation), or is or was serving at the request of the
Corporation or MHP as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise. Notwithstanding anything to the contrary contained
herein and except as otherwise provided by law, the Corporation
may, but shall have no obligation to, indemnify any present or
former director, officer, employee or agent of the Corporation or
MHP in accordance with this Article EIGHTH for any action, suit
or preceding which arose or may arise out of or in connection
with such individual's acts or failure to act which occurred
prior to March 15, 1989.
B. Authorization. Except as otherwise provided
by law, any indemnification under Section A of this Article
EIGHTH (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case and in
accordance with the provisions of Section 145 of the GCL.
C. Expenses. Expenses (including attorneys
fees) incurred by an officer or director in defending a civil,
criminal, administrative or investigative action, suit or
proceeding for which indemnification may be provided pursuant to
Section A of this Article EIGHTH above shall, so long as such
officer or director is serving in such capacity at the time such
<PAGE>
action, suit or proceeding is brought, be paid by the Corporation
in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
officer or director to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by
the Corporation as authorized in this ARTICLE EIGHTH.
D. Nonexclusivity. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Article EIGHTH shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses
may be entitled under any agreement, vote of stockholders or
disinterested directors, statute, court decision, insurance
policy or otherwise, now or hereafter in effect, both as to
action in a person's official capacity and as to action in
another capacity while holding office, and shall continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
E. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability
asserted against him or her and incurred in any such capacity, or
arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify the person against
such liability under the provisions of this Article EIGHTH or the
GCL.
F. Other Agreements. Without limiting the
generality of the foregoing, the Corporation shall have the
express authority to enter into such agreements as the Board
deems appropriate for the indemnification of former, present or
future directors, officers, employees and agents of the
Corporation in connection with their service to or status with
the Corporation or any other corporation, entity or enterprise
with whom such person is serving at the express written request
of the Corporation.
NINTH: Compromise Arrangements. Whenever a
compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court
or equitable jurisdiction within the State of Delaware may, on
the application in a summary way of this Corporation or of any
creditor or stockholder thereof or on the application of any
receiver or receivers appointed for this Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or
receivers appointed for this Corporation under the provisions of
<PAGE>
Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders
or class of stockholders of this Corporation, as the case may be,
to be summoned in such a manner as the said court directs. If a
majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or
class of stockholders this Corporation, as the case may be, agree
to any compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which said
application has been made, be binding on all of the stockholders
or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
TENTH: Amendments of Certificate of Incorporation.
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. Notwithstanding
the foregoing or any other provision of this Restated Certificate
of Incorporation or the Bylaws of the Corporation and
notwithstanding the fact that some lesser percentage may be
specified by law, the provisions set forth in this Article TENTH
and in Articles SEVENTH and EIGHTH hereof, may not be repealed,
rescinded, altered or amended in any respect, and no other
provision or provisions may be adopted which impair(s) in any
respect the operation or effect of any such provision, except by
the affirmative vote of the holders of not less than eighty
percent (80%) of the voting power of all outstanding shares of
Voting Stock regardless of class and voting together as a single
voting class, and, where such actions is proposed by an
Interested Stockholder (as such capitalized terms are defined
below), the affirmative vote of the holders of a majority of the
voting power of all then outstanding shares of Voting Stock,
regardless of class and voting together as a single voting class,
other than shares held by the Interested Stockholder which
proposed (or the Affiliate or Associate of which proposed) such
action, or any Affiliate or Associate of such Interested
Stockholder; provided, however, that where such action is
approved by a majority of the Disinterested Directors (as defined
below), the affirmative vote of a majority of the voting power of
all outstanding shares of Voting Stock, regardless of class and
voting class, shall be required for approval of such action.
ELEVENTH: Certain Definitions. As used in this
Certificate of Incorporation, the following capitalized terms
shall have the following meanings:
A. "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
<PAGE>
of 1944, as in effect on January 1, 1990.
B. A person shall be a "beneficial owner" of any
Voting Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to an agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise; provided, however, that a person shall not
be deemed the beneficial owner of 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 (b) the right to vote
pursuant to any agreement, arrangement or understanding;
provided, however, that a person shall not be deemed the
beneficial owner of any security if the agreement, arrangement or
understanding to vote such security (aa) arises solely from a
revocable proxy or consent solicitation made pursuant to, and in
accordance with, the Securities Exchange Act of 1944, as amended
(the "Exchange Act") and (bb) is not also then reportable on
Schedule 13D under the Exchange Act (or a comparable or successor
report); or
(iii) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of
its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding voting
(except to the extent permitted by the proviso of subsection B
(ii) of Article TENTH above) or disposing of any shares of Voting
Stock.
C. A "Disinterested Director" is any member of
the Board who is not an Interested Stockholder or an Affiliate or
Associate of any Interested Stockholder and either (i) was a
member of the Board immediately prior to the time that the
Interested Stockholder became an Interested Stockholder, or (ii)
was elected or nominated to succeed a Disinterested Director, or
to join the Board of Directors by a majority of Disinterested
Directors then on the Board.
D. "Interested Stockholder" shall mean any person
(other than the Corporation, any corporation of which a majority
of each class of equity security is owned, directly or
indirectly, by the Corporation (a "subsidiary"), or any employee
benefit plan or employee stock plan of the Corporation or any
subsidiary, or any person or entity organized, appointed,
established or holding Voting Stock for or pursuant to the terms
of any such plan) who or which:
(i) is the beneficial owner, directly or
indirectly, or more than 10% of the voting power of the
outstanding Voting Stock; or
<PAGE>
(ii) is an Affiliate of this Corporation and at any
time within the two-year period immediately prior to the
date in question was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the
then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time
within the two-year period immediately prior to the date
in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series
of transactions not involving a public offering within
the meaning of the Securities Act of 1933, as amended.
For the purposes of determining whether a person is an Interested
Stockholder, the number of shares of Voting Stock deemed to be
outstanding shall include shares of which such person is deemed
to be a beneficial owner, but shall not include any other shares
of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
E. A "person" shall mean any individual, firm,
corporation or other entity.
<PAGE>
CERTIFICATE OF CORRECTION
CERTIFICATE OF CORRECTION FILED
TO CORRECT A CERTAIN ERROR IN THE
RESTATED CERTIFICATE OF INCORPORATION OF
MAXICARE HEALTH PLANS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF
STATE OF DELAWARE ON DECEMBER 5, 1990
Maxicare Health Plans, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is Maxicare Health
Plans, Inc. The corporation was originally
incorporated under the name of Greatwest Hospitals,
Inc. The original Certificate of Incorporation was
filed with the Secretary of State of the State of
Delaware on January 5, 1981.
2. A Restated Certificate of Incorporation was filed
with the Secretary of State of Delaware on December
5, 1990, and said Restated Certificate requires
correction as permitted by subsection (f) of
Section 103 of The General Corporation Law of the
State of Delaware.
3. The inaccuracy or defect of said Restated
Certificate to be corrected is as follows:
The number "1991" contained in the seventh,
tenth and twelfth lines of subsection B.(i)
of Article Fifth of the Restated Certificate
should be deleted and the number "1990"
should be inserted in lieu thereof.
4. As corrected, said Article Fifth shall read
in its entirety as follows:
"FIFTH: Board of Directors.
A. Number of Directors. The number of
directors which shall constitute the board
of directors of the Corporation (the
"Board") shall be fixed in accordance with
the Bylaws of the Corporation.
<PAGE>
B. Classification of Board.
(i) The Board shall be divided into
three classes, Class I, Class II and Class
III. Each class shall have as nearly equal
in number of directors as possible, with the
term of office of the directors of one class
expiring each year; provided however, that
the directors initially serving to Class I
shall serve a term ending on the date of the
annual meeting next following the end of the
calendar year 1990, the directors initially
serving in Class II shall serve a term
ending on the date of the second annual
meeting next following the end of the
calendar year 1990, and the directors
initially serving in Class III shall serve
for a term ending on the date of the third
annual meeting next following the end of the
calendar year 1990. Except as specified in
Section C of this Article FIFTH, below, each
director shall serve for a term ending on
the date of the third annual meeting
following the annual meeting at which the
class of directors of which such director is
a member was elected. Election of directors
need not be by written ballot unless the
Bylaws of the Corporation shall otherwise
provide.
(ii) Upon any change in the
authorized number of directors, the Board
shall apportion any newly created
directorships to, or reduce the number of
directorships in, such class or classes as
shall, so far as possible, equalize the
number of directors in each class. If
consistent with the rule that the three
classes of directors shall be as nearly
equal in number of directors as possible,
the Board shall allocate any new
directorships to the available class whose
term of office is due to expire at the
earliest date following such allocation.
(iii) Nothwithstanding any provision
of this Section B of this Article FIFTH,
each director shall serve for a term
continuing until the annual meeting of the
stockholders at which the term of the class
to which he was elected expires and until
<PAGE>
his successor is elected and qualified or until his earlier
death, resignation or removal.
C. Vacancies on Board. Any vacancies occurring
in the Board for any reason, and any newly
created directorships resulting from any
increase in the number of directors, may be
filled by the Board, acting by a majority of
the directors then in office, although less
than a quorum or by the stockholders, and
any director so chosen shall hold office
until the next election of the class for
which such director shall have been chosen
and until his successor shall be elected and
qualified.
D. Removal of Directors. A director may be
removed by the holders of a majority of the
shares then entitled to vote at an election
of directors, but only for cause. Except as
may otherwise be provided by law, such cause
for removal shall exist only if the director
has been (i) convicted of a felony by a
court of competent jurisdiction and such
conviction is no longer subject to direct
appeal, (ii) adjudged by a court of
competent jurisdiction to be liable for
gross negligence or misconduct in the
performance of his duty to the Corporation
in a manner of substantial importance to the
Corporation, and such adjudication is no
longer subject to direct appeal, or (iii)
adjudged by a court of competent
jurisdiction to be an incompetent, with the
appointment of a guardian to administer the
director's affairs, and such adjudication is
no longer subject to direct appeal."
IN WITNESS WHEREOF, said Maxicare Health Plans,
Inc. has caused this Certificate to be signed on its behalf
by Peter J. Ratican, its Chairman of the Board of Directors,
Chief Executive Officer and President, and attested to by
Alan D. Bloom, its Secretary, this 15th day of May, 1991.
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Peter J. Ratican, Chairman
of the Board of Directors,
Chief Executive Officer and
President
ATTESTED:
By: /s/ Alan D. Bloom
Alan D. Bloom
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
HEALTHAMERICA CORPORATION
INTO
MAXICARE HEALTH PLANS, INC.
* * * *
MAXICARE HEALTH PLANS, INC., a corporation organized and
existing under the laws of Delaware.
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated
on the 5th day of January, 1981, pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the
outstanding shares of the stock of HEALTHAMERICA CORPORATION, a
corporation incorporated on the 1st day of October, 1980,
pursuant to the General Corporation Law of the State of Delaware.
THIRD: That this corporation, by the
following resolutions of its Board of Directors, adopted and
filed with the minutes of the Board on the 5th day of December,
1990, determined to and did merge into itself said HEALTHAMERICA
CORPORATION.
RESOLVED, that MAXICARE HEALTH PLANS, INC. merge, and it
hereby does merge into itself said HEALTHAMERICA CORPORATION, and
assumes all of its obligations; and
FURTHER RESOLVED, that the merger shall be effective on
December 31, 1990 for accounting purposes only.
FURTHER RESOLVED, that the proper officers of this
corporation be and they hereby are directed to make and execute a
Certificate of Ownership and Merger setting forth a copy of the
resolutions to merge said HEALTHAMERICA CORPORATION, and assume
its liabilities and obligations, and the date of adoption
thereof, and to cause the same to be filed with the Secretary of
State and a certified copy recorded in the office of the Recorder
of Deeds of New Castle County and to do all acts and things
whatsover, whether within or without the State of Delaware, which
may be in anywise necessary or proper to effect said merger.
FOURTH: Anything herein or elsewhere to the
contrary notwithstanding, this merger may be amended or
terminated and abandoned by the Board of Directors of MAXICARE
HEALTH PLANS, INC. at any time prior to the date of filing the
merger with the Secretary of State.
<PAGE>
IT WITNESS WHEREOF, said MAXICARE HEALTH PLANS, INC. has
caused this Certificate to be signed by Peter Ratican, its
President and attested by Alan Bloom its Secretary, this 4th day
of November, 1991.
MAXICARE HEALTH PLANS, INC.
BY /s/ Peter Ratican
Peter Ratican, President
ATTEST:
By /s/ Alan Bloom
Alan Bloom, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXICARE HEALTH PLANS, INC.
Maxicare Health Plans, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware does hereby certify:
1. That at a meeting of the Board of Directors of Maxicare
Health Plans, Inc., resolutions were adopted setting forth a
proposed amendment of the Restated Certificate of Incorporation
of said Corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said Corporation for
consideration thereof. The resolution setting forth the proposed
amendment approved the amendment of the Restated Certificate of
Incorporation of the Corporation by changing the Article thereof
numbered "Fourth" so that, as amended, said Article shall be and
read in its entirety as follows:
"FOURTH: CAPITAL STOCK.
A. Authorized Capital Stock. The Corporation is
authorized to issue two classes of shares to be
designated Common Stock and Preferred Stock,
respectively. The Corporation is authorized to
issue 40,000,000 shares of Common Stock, par value
$.01 and 5,000,000 shares of Preferred Stock, par
value $.01, which shall be issued from time to time
in series, and of which 2,500,000 shares shall be
designated as Series A Cumulative Convertible
Preferred Stock (the "Series A Stock"). The
rights, preferences, privileges and restrictions of
the Series A Stock and of the respective holders
thereof shall be as set forth in this Article
Fourth. Except with respect to the shares of its
Preferred Stock designated as Series A Stock, the
Board of Directors of the Corporation (the "Board
of Directors") is authorized to determine and alter
the rights, preferences, privileges and
restrictions granted to and imposed upon any series
of Preferred Stock with respect to any wholly
unissued series of Preferred Stock, and to fix the
number of shares of any series of Preferred Stock
and the designation of any series of Preferred
Stock. The Board of Directors, within the limits
and restrictions stated in any resolution or
<PAGE>
resolutions of the Board of Directors originally
fixing the number of shares constituting any
series, may increase or decrease (but not below the
number of shares of such series then outstanding)
the number of shares of any series subsequent to
the issuance of shares of that series.
B. Voting Rights.
(1) Common Shares. Each holder of Common
Stock shall be entitled to one vote in respect of
each share of such stock held by such holder of
record.
(2) Series A Stock. Except as may be
otherwise provided in these terms of the Series A
Stock or by law, the Series A Stock shall vote
together with the Common Stock as a single class
(together with all other classes and series of
stock of the Corporation that are entitled to vote
as a single class with the Common Stock) on all
actions submitted to a vote for, or consent by, the
holders of the Common Stock. Each holder of Series
A Stock shall be entitled to such number of votes
in respect of such stock as shall equal the number
of shares of Common Stock into which the shares of
Series A Stock held by such holder of record are
then convertible.
(3) Required Vote for Changes to Series A
Stock Rights. So long as any shares of Series A
Stock remain outstanding, the Corporation will not,
either directly or indirectly or through merger or
consolidation with or into any other corporation,
without the affirmative vote at a meeting, or the
written consent with or without a meeting, of the
holders of at least sixty-six and two-thirds
percent (66-2/3%) in number of shares of the Series
A Stock then outstanding, (i) create or issue, or
increase the authorized number of, shares of any
class or classes or series of stock ranking prior
to the Series A Stock either as to dividends or
upon liquidation, (ii) amend, alter or repeal any
of the provisions of the Certificate of
Incorporation of the Corporation (including this
Article Fourth) so as to affect adversely the
preferences, special rights or powers of the Series
A Stock, or (iii) authorize any reclassification of
the Series A Stock.
<PAGE>
C. Dividends.
(1) Series A Stock Preference. The
holders of the Series A Stock shall be entitled to
receive, when, as and if declared by the Board of
Directors, and out of funds of the Corporation
legally available therefor, annual dividends of
$2.25 per share (the "Dividend Rate"), payable in
cash, in quarterly installments commencing on the
first Dividend Date (as defined below) after the
date of initial issuance of the Series A Stock, but
in no event earlier than June 30, 1992, and
continuing quarterly thereafter on the last day of
each March, June September and December (each a
"Dividend Date") on which any shares of Series A
Stock are outstanding. Such dividends shall be
payable to holders of record of Series A Stock as
they appear on the stock books of the Corporation
on such record date, not more than sixty (60) days
nor less than ten (10) days preceding the Dividend
Date, as shall be fixed by the Board of Directors
therefor. Such dividends on the Series A Stock
shall accrue from day to day, whether or not earned
or declared, and shall be cumulative from the date
of initial issuance of the shares of Series A Stock
(the "Original Issue Date") so that if such
dividends in respect of any previous quarterly
dividend period at said Dividend Rate shall not
have been paid on, or declared and set apart for
all shares of, Series A Stock at the time
outstanding, the deficiency shall be fully paid on,
or declared and set apart for payment on, each
outstanding share of Series A Stock before the
Corporation declares or pays any dividend on, makes
any distribution to holders of, or repurchases or
otherwise acquires for value shares of Common Stock
or any other stock of the Corporation ranking
junior to the Series A Stock. Dividends on Series
A Stock payable for any partial dividend period
shall be calculated on the basis of a 360-day year
of twelve 30-day months. Accrued but unpaid
dividends shall not bear interest.
(2) Partial Payment of Series A Stock
Dividend. If the Board of Directors shall declare a
payment of a dividend and the amount declared for
dividend payment is insufficient to permit the
payment of the full preferential amounts required
to be paid to the holders of Series A Stock, then
the entire amount declared for dividend payment
shall be distributed ratably among the holders of
the Series A Stock.
<PAGE>
D. Liquidation.
(1) Series A Stock Preference. The shares
of Series A Stock shall rank prior to the shares of
Common Stock and any other class of stock of the
Corporation ranking junior to the Series A Stock
upon liquidation, including any other series of
Preferred Stock (such Common Stock and other stock
collectively referred to hereinafter as "Junior
Liquidation Stock"), so that upon any liquidation,
dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of
the Series A Stock then outstanding shall first be
entitled, before any distribution or payment is
made upon any Junior Liquidation Stock, to be paid
out of the assets of the Corporation available for
distribution to its stockholders, whether from
capital, surplus or earnings, an amount equal to
$25.00 per share plus, in the case of each share,
an amount equal to all accrued but unpaid dividends
thereon (whether or not earned or declared) and any
other dividends declared but unpaid thereon,
computed to the date fixed for distribution
thereof. Such amount payable with respect to each
share of Series A Stock being sometimes referred to
as the "Liquidation Preference Payment" and with
respect to all shares of Series A Stock being
sometimes referred to as the "Liquidation
Preference Payments." If upon such liquidation,
dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be
distributed among the holders of Series A Stock
shall be insufficient to permit payment in full to
the holders of Series A Stock of the Liquidation
Preference Payments, then the entire assets of the
Corporation to be so dis-tributed shall be
distributed ratably among the holders of Series A
Stock in accordance with the respective amounts
that would be payable on such shares if all
amounts payable thereon were paid in full. Upon
any such liquidation, dissolution or winding up of
the Corporation, immediately after the holders of
Series A Stock shall have been paid in full the
Liquidation Preference Payments, the holders of
Series A Stock will not be entitled to any further
participation in any distribution of assets by the
Corporation and the remaining net assets of the
Corporation available for distribution to its
stockholders shall be distributed ratably among the
holders of Junior Liquidation Stock. Written
notice of such liquidation, dissolution or winding
up, stating a payment date and the place where said
<PAGE>
payments shall be made, shall be given by the
Corporation by facsimile, personal delivery or
overnight courier and confirmed by registered or
certified mail (return receipt requested), or by
first class mail (postage prepaid) not less than 20
days prior to the payment date stated therein, to
the holders of record of Series A Stock, such
notice to be addressed to each holder at such
holder's address as shown by the records of the
Corporation.
(2) Consolidation or Merger. A
consolidation, merger or other business combination
of the Corporation into or with any other entity or
entities (whether or not the Corporation is the
surviving entity), a sale, transfer or other
conveyance by the Corporation of all or
substantially all of its assets, or a sale,
transfer or other conveyance of all or
substantially all of the outstanding Common Stock
in any transaction or related series of
transactions shall not be deemed to be a
liquidation, dissolution or winding up of the
Corporation within the meaning of the provisions of
this Section D.
E. Optional Redemption. At the option of the
Corporation, the Corporation may, from time to time
following the third anniversary of the Original
Issue Date, redeem from each holder of shares of
Series A Stock all or a pro rata portion of the
shares of Series A Stock held by such holder
pursuant to the following terms:
(1) Redemption Price and Payment. The
Series A Stock to be redeemed shall be redeemed by
paying in cash therefor an amount equal to $25.00
per share plus, in the case of each share, an
amount equal to all accrued but unpaid dividends
thereon (whether or not earned or declared) and any
other dividends declared but unpaid thereon (the
"Optional Redemption Price"), computed to the date
set for redemption by the Corporation (the
"Optional Redemption Date"). Such payment shall be
made in full on the Optional Redemption Date to the
holders entitled thereto.
(2) Redemption While Dividends Unpaid. If
full cumulative dividends on the Series A Stock
have not been paid through the most recent Dividend
Date, the Series A Stock may not be redeemed in
part and the Corporation may not purchase or
acquire any shares of the Series A Stock otherwise
<PAGE>
than pursuant to a purchase or exchange offer made
on the same terms to all holders of the Series A
Stock.
(3) Redemption Mechanics.
(a)At least 20 but not more than 30
days prior to the Optional Redemption Date, written
notice (the "Optional Redemption Notice") shall be
given by the Corporation by facsimile, personal
delivery or overnight courier and confirmed by
registered or certified mail (return receipt
requested) or by first class mail (postage prepaid)
to each holder of record (at the close of business
on the business day next preceding the day on which
the Optional Redemption Notice is given) of Series
A Stock notifying such holder of the redemption and
specifying the amount of the Optional Redemption
Price, the Optional Redemption Date, the place
where the Optional Redemption Price shall be
payable and the number of shares of such holder's
Series A Stock to be redeemed, if any. The
Optional Redemption Notice shall be addressed to
each holder at such holder's address as shown by
the records of the Corporation.
(b)If an Optional Redemption Notice
has been given pursuant to this Section E and if,
on or before the Optional Redemption Date, the
funds necessary for the redemption shall have been
set aside by the Corporation, separate and apart
from its other funds, in trust for the pro rata
benefit of the holders of the shares so called for
redemption, then, notwithstanding that any
certificates for those shares have not been
surrendered for cancellation, on the Optional
Redemption Date, unless the Corporation
subsequently shall default in making, be restrained
from making by a court or other governmental order
or decree, or otherwise fail to make timely payment
of the Optional Redemption Price on such shares (in
which case this Section E(3)(b) shall be of no
effect as to any shares not timely redeemed),
dividends shall cease to accrue on the shares of
Series A Stock to be redeemed, and from and after
the close of business on the Optional Redemption
Date the holders of those shares shall cease to be
stockholders with respect to those shares, shall
have no interest in or claims against the
Corporation by virtue thereof, and shall have no
voting or other rights with respect to the shares,
except the right to receive the Optional Redemption
Price upon surrender (and endorsement, if required
<PAGE>
by the Corporation) of their certificates, and such
shares shall not thereafter be transferred on the
books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.
(c)If on or before an Optional
Redemption Date (but no later than the close of
business on the day prior to the Optional
Redemption Date) the Corporation shall deposit, in
a trust fund, with any bank or trust company
organized under the laws of the United States of
America or any state thereof having a combined
capital and surplus of at least $250,000,000 (the
"Optional Redemption Agent") moneys sufficient to
redeem on the Optional Redemption Date the shares
of Series A Stock to be redeemed, with irrevocable
instructions and authority to Optional Redemption
Agent, on behalf and at the expense of the
Corporation, to pay, on the Optional Redemption
Date or prior to that date, the full amount of the
consideration (consisting of the Optional
Redemption Price) payable to the holders of the
Series A Stock upon the redemption, upon surrender
(and endorsement, if required by the Corporation )
of their certificates, then, from and after the
close of business on the date of such deposit
(although prior to the Optional Redemption Date)
(the "Deposit Date"), unless the Corporation shall
subsequently default in making, be restrained from
making by a court or other governmental order or
decree, or otherwise fail to make, or the Optional
Redemption Agent is restrained in connection with
legal proceedings in which the Corporation is a
party from making, timely payment of the Optional
Redemption Price on such shares (in which case this
Section E(3)(c) shall be of no effect as to any
shares not timely redeemed), the deposit shall be
deemed to constitute full and final payment for the
shares of Series A Stock to be redeemed to the
holders thereof and, notwithstanding that any
certificates for those share have not been
surrendered for cancellation, on the Optional
Redemption Date dividends shall cease to accrue on
the shares of Series A Stock to be redeemed, and at
the close of business on the Deposit Date the
holders of those shares shall cease to be
stockholders with respect to those shares and shall
have no interest in or claims against the
Corporation by virtue thereof and shall have no
voting or other rights with respect to the shares,
except the right to receive the Optional Redemption
Price, without interest thereon, upon surrender
(and endorsement, if required by the
<PAGE>
Corporation) of their certificates, and the shares
evidenced thereby shall no longer be deemed
outstanding for any purpose.
(4) Election to Convert in Lieu of
Redemption. Notwithstanding the foregoing, if an
Optional Redemption Notice shall have been given
pursuant to this Section E and any holder of shares
of Series A Stock shall, prior to the close of
business on the fifth (5th) day prior to an
Optional Redemption Date, give written notice to
the Corporation of and otherwise comply with the
procedure required pursuant to Section G below for
the conversion of any or all of the shares held by
the holder, then the redemption shall not become
effective as to the shares to be converted and the
conversion shall become effective as provided in
Section G below; provided, however, that if the
Corporation shall default in making, be restrained
from making by a court or other governmental order
or decree, or otherwise fail to make, or the
Optional Redemption Agent, if any, is restrained in
connection with legal proceedings in which the
Corporation is a party from making, timely payment
of the Optional Redemption Price, any notice of
conversion that was given to the Corporation
subsequent to the date of such Optional Redemption
Notice may, at the option of the holder who gave
such conversion notice, be revoked and be of no
effect and the Corporation shall return to such
holder all certificates representing shares of
Series A Stock which were converted by such
holder's revoked conversion notice upon the
holder's surrender of all certificates, if any,
representing Common Stock issued to such holder as
a result of the conversion.
(5) Reversion of Redemption Funds.
Subject to applicable escheat laws, any moneys
necessary for redemption set aside or deposited by
the Corporation and unclaimed at the end of two
years from the Optional Redemption Date shall
revert to the general funds of the Corporation,
after which reversion the holders of such shares so
called for redemption but not surrendered shall
look only to the general funds of the Corporation
for payment of the amounts payable upon such
redemption. Any interest accrued on funds so set
aside or deposited shall belong to the Corporation
and shall be paid to it from time to time. Any
funds which have been deposited by the Corporation,
or on its behalf, with a redemption agent or
<PAGE>
segregated and held in trust by the Corporation for
the redemption of shares converted into Common
Stock on or prior to the date fixed for such
redemption shall (subject to any right of the
holder of such shares to receive the dividend
payable thereon as provided in Section G(3) below)
immediately upon such conversion be returned to the
Corporation, or if then held in trust by the
Corporation, shall be discharged from such trust.
F. Redemption by the Holder.
(1) Share Acquisition or Business
Combination. In the event that (i) any "person"
(as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act") becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of all or
substantially all of the Common Stock (a "Share
Acquisition"), or (ii) the Corporation is a party
to the sale of all or substantially all of its
assets (a "Sale"), or (iii) the Corporation is a
party to a combination, merger or consolidation in
which the holders of the Corporation's outstanding
Series A Stock immediately prior to the transaction
do not immediately thereafter (x) if the
Corporation is the surviving entity, continue to
hold such shares, without material change in the
rights preferences or priorities accorded thereto,
or (y) if the Corporation is not the surviving
entity, receive in exchange for such shares
preferred stock in the surviving entity of
substantially equivalent rights, preferences and
priorities (a "Business Combination"), then each
holder of Series A Stock, subject to the conditions
set forth in this Section F, shall have the option
to require the Corporation to redeem all of the
shares of Series A Stock owned by such holder for
an amount equal to $25.00 per share, plus, in the
case of each share, an amount equal to all accrued
but unpaid dividends thereon (whether or not earned
or declared) and any other dividends, declared but
unpaid thereon, computed to the date fixed for
redemption (such amount is hereinafter referred to
as the "Holder Redemption Price"). For the
purposes of this Section F, any of the events
described in clauses (i), (ii) and (iii) of this
Subsection F(1) is a "Change of Control".
(2) Holder Redemption Mechanics.
(a)Within five days after the
Corporation has knowledge that Share Acquisition
has
<PAGE>
occurred, or no later than 50 days prior to the
effective date of a Sale or Business Combination,
as applicable, the Corporation shall send to each
holder of Series A Stock (at such holder's address
as shown by the records of the Corporation) a form
of written demand to be used by such holder to
exercise the holder's right of redemption (a
"Demand Form") and a notice which shall (i)
disclose the occurrence of the Change of Control
and the right of the holder to require the
Corporation to redeem all, but not less than all,
of the holder's shares of Series A Stock pursuant
to this Subsection F(2) if the holders of at least
seventy-five percent (75%) of the then outstanding
shares of Series A Stock shall so demand, and (ii)
state (A) the date fixed for redemption (the
"Holder Redemption Date"), the amount of the Holder
Redemption Prices and the name and address of any
entity authorized by the Corporation to pay any
amounts payable upon redemption (the "Paying
Agent"), (B) that no shares of Series A Stock will
be redeemed unless the holders of at least seventy-
five percent (75%) of the then outstanding Series A
Stock elect to have their shares redeemed, (C) that
the shares of Series A Stock to be redeemed must be
surrendered to the Paying Agent, if any, or to the
Corporation to receive the Holder Redemption Price,
and (D) the date by which the holder must notify
the Corporation if such holder elects to require
the Corporation to make the redemption (the "Demand
Form Due Date") which date shall be no later than
the close of business on the date that is 30 days
from the date the notice of the Change of Control
and form Demand Form is given to holders of Series
A Stock pursuant to this Subsection F(2). For the
purposes hereof, the Holder Redemption Date shall
be a date which is no later than 55 days after the
Corporation has knowledge that a Share Acquisition
has occurred, or the day immediately prior to the
effective date of a Sale or Business Combination,
as applicable.
(b)By the close of business on the day
prior to the Holder Redemption Date, the
Corporation shall deposit with the Paying Agent, if
any, or set aside, separate and apart from its
other funds, in trust for the pro rata benefit of
the holders of the shares of Series A Stock subject
to redemption, funds sufficient to redeem on the
Holder Redemption Date all of the shares of Series
A Stock outstanding on the date of the delivery of
the notice referred to above.
<PAGE>
(c)Each holder of Series A Stock which
elects to require the Corporation to redeem on the
Holder Redemption Date all of the shares of Series
A Stock that such holder owns shall deliver to the
Corporation by the Demand Form Due Date a completed
Demand Form relating to the shares of Series A
Stock to be redeemed. In the event that, and only
in the event that, the holders of at least seventy-
five percent (75%) of the then outstanding shares
of Series A Stock shall have so elected to redeem
their shares, the Corporation shall (i) within five
(5) days after the Demand Form Due Date, give to
each holder of Series A Stock (at such holder's
address as shown by the records of the Corporation)
a notice stating that a redemption has been
requested by holders of at least seventy-five
percent (75%) of the then outstanding shares of
Series A Stock and providing other instructions
regarding the manner and procedure for surrendering
the Series A Stock share certificates to be
redeemed and receiving the Holder Redemption Price
therefor, and (ii) at the close of business on the
Holder Redemption Date, redeem at the Holder
Redemption Price each of the shares of Series A
Stock for which a completed Demand Form has been
delivered to the Corporation by the holder of such
shares for redemption pursuant to this Subsection
F(2). Notwithstanding that any certificate of
holders of Series A Stock who have delivered to the
Corporation a Demand Form has not been surrendered
for redemption, (unless the Corporation shall
subsequently default in making, be restrained from
making by a court or other governmental order or
decree, or otherwise fail to make, or the Paying
Agent is restrained in connection with legal
proceedings in which the Corporation is party from
making, timely payment of the Holder Redemption
Price on such shares surrendered, in which case
this sentence shall be of no effect as to any
shares not timely redeemed) on the Holder
Redemption Date pursuant to this Subsection F(2),
all dividends shall cease to accrue on such shares
of Series A Stock to be redeemed, and at the close
of business on the Holder Redemption Date the
holders who have delivered to the Corporation a
Demand Form shall cease to be stockholders with
respect to the shares they hold and shall have no
interest in or claims against the Corporation by
virtue thereof except the right to receive the
Holder Redemption Price, without interest thereon,
upon surrender (and endorsement, if required by the
<PAGE>
Corporation) of such holders' Series A Stock share
certificates. Following payment of the Holder
Redemption Price for all shares of Series A Stock
required to be redeemed pursuant to this Subsection
F(2), if any, or if any moneys necessary for the
redemption remain deposited or set aside and
unclaimed on the second anniversary of the
corresponding Holder Redemption Date, or if the
Corporation determines for any reason that the
contemplated Change of Control will not occur, all
funds remaining from the amounts previously
deposited with the Paying Agent, if any, or set
aside by the Corporation, and all interest earned
thereon, shall belong and be immediately released
to the Corporation as part of its general funds.
If any certificates relating to shares of Series A
Stock shall be surrendered to the Paying Agent, if
any, or the Corporation in connection with a
redemption required to be made under this
Subsection F(2) and for any reason whatsoever the
relevant Sale or Business Combination does not
become effective, then the Corporation shall, or
shall cause the Paying Agent, if any, to return the
certificates promptly to their respective original
holders.
(d)For the purposes of this Subsection
F(2), any notice required to be given or sent by
the Corporation to the holders of Series A Stock
shall be given or sent by facsimile, personal
delivery or overnight courier and confirmed by
registered or certified mail (return receipt
requested), or by first class mail (postage
prepaid).
(3) Election for Holder Redemption. An
election by a holder of Series A Stock to have the
Corporation redeem the shares of Series A Stock
pursuant to Subsection F(2) above shall become
irrevocable by the holder at the close of business
on the relevant Holder Redemption Date; provided,
however, that if the required number of holders of
Series A Stock do not elect as of the Demand Form
Due Date to have shares redeemed pursuant to this
Section F and maintain such elections in force
through the close of business on the Holder
Redemption Date, then all such elections shall be
deemed cancelled.
(4) Provisions for Holder Redemption. The
Corporation shall not complete any Sale or Business
Combination unless proper provision has been made
to satisfy its obligations under this Section F.
<PAGE>
G. Conversion. The holders of the Series A Stock
shall have conversion rights as follows:
(1) Right to Convert.
(a)Each share of Series A Stock shall
be convertible into Common Stock, at the option of
the holder thereof, without payment of additional
consideration by such holder except as otherwise
provided herein, at any time after the date of
issuance of such share and on or prior to the fifth
(5th) day prior to an Optional Redemption Date, if
any, as may have been fixed in any Optional
Redemption Notice, at the office of the Corporation
or any transfer agent for the Series A Stock, at
the initial conversion rate of 2.7548 fully paid
and nonassessable shares of Common Stock for each
share of Series A Stock (calculated as to each
conversion to the nearest one hundredth of a share
of Common Stock), subject, however, to the
adjustments described in this Section G. (The
number of shares of Common Stock into which each
share of Series A Stock may be converted is
hereinafter referred to as the "Conversion Rate".)
In the event of a call for redemption by the
Corporation pursuant to Section E hereof, with
respect to any shares of Series A Stock which are
convertible into Common Stock, the conversion
rights shall terminate as to the shares of Series A
Stock designated for preceding the Optional
Redemption Date, unless default is made in payment
of the Optional Redemption Price.
(b)No fractional shares of Common
Stock shall be issued upon conversion of Series A
Stock and any fractional interest in a share of
Common Stock resulting from a conversion of a share
or shares of Series A Stock shall be (i) cancelled
if the resulting fractional interest is equal to or
less than one-half (1/2) of a share of Common
Stock, or (ii) rounded up to the next whole share
of Common Stock if the resulting fraction interest
is greater than one-half (1/2) of a share of Common
Stock. If more than one share of Series A Stock
shall be surrendered for conversion at one time by
the same holder, the number of full shares of
Common Stock issuable upon their conversion shall
be computed on the basis of the aggregate number of
shares of Series A Stock surrendered by such holder
for conversion.
<PAGE>
(2) Mechanics of Conversion. Before any
holder of Series A Stock shall be entitled to
convert the same into shares of Common Stock, the
holder shall surrender the certificate or
certificates therefor, duly endorsed, at the
principal office of the Corporation or of any
transfer agent for the Series A Stock, and shall
give written notice to the Corporation at such
office that the holder elects to convert the same,
stating therein the number of shares of Series A
Stock being converted. The Corporation shall
promptly issue and deliver at such office to such
holder, or to such holder's nominee or nominees, a
certificate or certificates for the number of
shares of Common Stock to which the holder shall be
entitled. Such conversion shall be deemed to have
been made immediately prior to the close of
business on the date of such surrender of the
shares of Series A Stock to be converted, and the
person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or
holders of such shares of Common Stock on such
date.
(3) Effect of Conversion on Dividends.
The holders of shares of Series A Stock at the
close of business on a record date prior to the
Dividend Date shall be entitled to receive the
dividend payable on those shares on the
corresponding Dividend Date, notwithstanding the
conversion of the shares after the dividend payment
record date or the Corporation's default in payment
of the dividend due on the Dividend Date. Except
as provided above, the Corporation shall make no
payment or adjustment for accrued and unpaid
dividends on shares of Series A Stock, whether or
not in arrears, on conversion of those shares or
for dividends on the shares of Common Stock issued
upon the conversion.
(4) Adjustments to Conversion Rate. The
Conversion Rate shall be subject to adjustment from
time to time as follows:
(a)In the event the Corporation at any
time or from time to time after the Original Issue
Date (i) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock, or
(ii) effects a subdivision or combination of its
outstanding Common Stock into a greater or lesser
number of shares without a
<PAGE>
proportionate and corresponding subdivision or
combination of its outstanding Series A Stock, then
and in each such event the Conversion Rate in
effect immediately prior to such event shall be
increased or decreased proportionately so that the
holder of any shares of Series A Stock thereafter
surrendered for conversion shall be entitled to
receive the number of shares of Common Stock which
such holder would have owned or have been entitled
to receive after the happening of such event had
the Series A Stock shares been converted
immediately prior to the happening of such event.
An adjustment made pursuant to this Section G(4)(a)
shall become effective immediately after the close
of business on the record date in the case of a
dividend or distribution except as provided in
Section G(5) below, and shall become effective
immediately after the effective date in the case of
a subdivision or combination. If any dividend or
distribution is not fully paid or made on the date
fixed therefor, the Conversion Rate shall be
recomputed accordingly as of the close of business
on such corresponding record date and thereafter
the Conversion Rate shall be adjusted pursuant to
this Subsection G(4)(a) as of the time of actual
payment of such dividends or distributions.
(b)In the event the Corporation at any
time or from time to time after the Original Issue
Date shall issue rights, options or warrants (other
than stock options granted to employees, officers
or directors of the Corporation) to all holders of
its Common Stock entitling them to subscribe for or
purchase Common Stock at a price per share less
than the Current Market Price (as defined in
Subsection G(4)(d) below) of the Common Stock at
the date of pricing of the rights, options or
warrants, the Conversion Rate in effect immediately
prior to the date of pricing of such rights,
options or warrants shall be adjusted by
multiplying such Conversion Rate by a fraction of
which the numerator shall be the number of shares
of Common Stock outstanding on the date of pricing
of the rights, options or warrants plus the number
of additional shares of Common Stock offered for
subscription or purchase, and of which the
denominator shall be the number of shares of Common
Stock outstanding on the date of pricing of the
rights, options or warrants plus the number of
shares of Common stock which the aggregate offering
price of the total number of shares of Common Stock
so offered for subscription or purchase would
purchase at the Current Market Price at such date
<PAGE>
of pricing. The adjustment provided for in this
Subsection G(4)(b) shall be made successively
whenever any such rights, options or warrants are
issued, and shall become effective immediately
after the date of issue, except as provided in
Subsection G(5) below. In determining whether any
rights, options or warrants entitle the holders of
the Common Stock to subscribe for or purchase
shares of Common Stock at less than the Current
Market Price, and in determining whether any
rights, options or warrants entitle the holders of
the Common Stock to subscribe for or purchase
shares of Common Stock at less than the Current
Market Price, and in determining the aggregate
offering price of the shares of Common Stock so
offered, there shall be taken into account any
consideration received by the Corporation for such
rights, options or warrants, the value of such
consideration, if other than cash, to be computed
at the then fair market value thereof as determined
by the Board (whose good faith determination shall
be conclusive). If any or all of such rights,
options or warrants are not so issued or expire or
terminate without having been exercised, the
Conversion Rate then in effect shall be
appropriately readjusted.
(c)In the event the Corporation shall
distribute to all holders of its Common Stock any
shares of capital stock of the Corporation (other
than Common Stock) or evidences of indebtedness or
assets (excluding cash dividends or distributions
paid from retained earnings of the Corporation) or
rights or warrants to subscribe for or purchase any
of its securities (excluding those referred to in
Subsection G(4)(b) above) then, in each such case,
the Conversion Rate in effect immediately prior to
the date of the distribution by a fraction of which
the numerator shall be the Current Market Price of
the Common Stock on the record date used in
determining distributions in the case of any
distribution of stock, evidences of indebtedness or
assets, or on the date of pricing in the case of
any distribution of rights or warrants, and of
which the denominator shall be the Current Market
Price of the Common Stock on the applicable record
date or pricing date mentioned above less the then
fair market value (as determine by the Board, whose
good faith determination shall be conclusive) of
the portion of the capital stock or assets or
evidences of indebtedness so distributed, or of the
rights or warrants so distributed, with respect to
one share of Common Stock. Such adjustment shall
<PAGE>
become effective immediately after the applicable
record date or, in the case of rights or warrants,
the date of issuance, except as provided in
Subsection G(5) below. If any such distribution is
not made or if any or all of such rights or
warrants expire or terminate without having been
exercised, the Conversion Rate then in effect shall
be appropriately readjusted.
(d)For the purpose of any computation
under Subsections G(4)(b) or G(4)(c) above, the
"Current Market Price" of the Common Stock at any
date shall be the average of the last reported sale
prices per share for the ten consecutive Trading
Days (as defined below) preceding the date of such
computation. The last reported sale price for each
day shall be (i) the last reported sale price of
the Common Stock on the National Market System of
the National Association of Securities Dealers,
Inc. Automated Quotation System (the "NASDAQ
National Market System"), or any similar system of
automated dissemination of quotations of securities
prices then in common use, if so quoted, or (ii) if
not quoted as described in clause (i), the mean
between the high bid and low asked quotations for
the Common Stock as reported by the National
Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and ask
quotations for the Common Stock on at least five of
the then preceding days, or (iii) if the Common
Stock is listed or admitted for trading on any
national securities exchange, the last sale price,
or the closing bid price if no sale occurred, of
the Common Stock on the principal securities
exchange on which the Common Stock is listed. If
the Common Stock is quoted on a national securities
or central market system, in lieu of a market or
quotation system described above, the last reported
sale price shall be determined in the manner set
forth in clause (ii) of the preceding sentence if
bid and ask quotations are reported but actual
transactions are not, and in the manner set forth
in clause (iii) of the preceding sentence if actual
transactions are reported. If none of the
conditions set forth above is met, the last
reported sale price of the Common Stock on any day
or the average of such last reported sale prices
for any period shall be the fair market value of
such class of stock as determined by a member firm
of the New York Stock Exchange, Inc. selected by
the Corporation. As used herein the term "Trading
Days" means (x) if the Common Stock is quoted on
the NASDAQ National Market System or any similar
<PAGE>
system of automated dissemination of quotations of
securities prices, days on which trades may be made
on such system, or (y) if not quoted as described
in clause (x), days on which quotations are
reported by the National Quotation Bureau
Incorporated, or (z) if the Common Stock is listed
or admitted for trading on any national securities
exchange, days on which such national securities
exchange is open for business.
(e)No adjustment in the Conversion
Rate shall be required unless such adjustment would
require a change of at least one percent (1%) in
the Conversion Rate; provided, however, that any
adjustments which by reason of this Subsection
G(4)(e) are not required to be made shall be
carried forward and taken into account in any
subsequent adjustment. All calculations under this
Section G shall be made to the nearest cent or to
the nearest one hundredth of a share, as the case
may be.
(5) Deferred Actions in Event of
Adjustment. In any case in which this Section G
provides that an adjustment shall become effective
immediately after a record date for an event, the
Corporation may defer until the occurrence of the
event issuing to the holder of any share of Series
A Stock converted after the record date and before
the occurrence of the event the additional shares
of Common Stock issuable upon the conversion by
reason of the adjustment required by the event over
and above the Common Stock issuable upon such
conversion before giving effect to the adjustment.
(6) No Impairment. The Corporation will
not, by amendment of its Restated Certificate of
Incorporation or through any reorganization,
transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be
observed or performed hereunder by Corporation, but
will at all times in good faith assist in the
carrying out of all the provisions of this Section
E and in the taking of all such action as may be
necessary or appropriate in order to protect the
conversion rights of the holders of the Series A
Stock against impairment.
(7) Certificate as to Adjustments. Upon
the occurrence of each adjustment or readjustment
of the Conversion Rate pursuant to this Section G,
<PAGE>
the Corporation, at its expense shall promptly
compute such adjustment or readjustment in
accordance with the terms hereof and prepare and
promptly furnish to each holder of Series A Stock
(at such holder's address as then shown on the
records of the Corporation) and any transfer agent
of the Series A Stock a certificate of an executive
officer of the Corporation setting forth such
adjustment or readjustment and the Conversion Rate
in effect after such adjustment or readjustment,
and showing in detail the facts upon which such
adjustment or readjustment is based. The
Corporation shall, upon the written request at any
time of any holder of Series A Stock, furnish or
cause to be furnished to such holder a like
certificate setting forth (i) such adjustment and
readjustments, (ii) the Conversion Rate at the time
in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property
which at the time would be received upon the
conversion of Series A Stock.
(8) Notices of Record Date. In the event
of any taking by the Corporation of record of the
holders of any class of securities for the purpose
of determining the holders thereof who are entitled
to receive (i) any dividend (other than a cash
dividend out of retained earnings) or other
distribution, (ii) any other securities, warrants
or rights convertible into or entitling the holder
thereof to receive shares of Common Stock, (iii)
any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any
other securities or property, or (iv) any other
right issued by, or property of, the Corporation
(including, without limitation, rights arising in
connection with the voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation), the Corporation shall deliver by
facsimile, personal delivery or overnight courier
and confirmed by registered or certified mail
(return receipt requested), or by first class mail
(postage prepaid) to each holder of Series A Stock
and to any transfer agent for Series A Stock, at
least twenty (20) days prior to the record date
specified therein, a notice specifying the date on
which any such record is to be taken for the
purpose of such dividend, distribution or rights,
and the amount and character of such dividend,
distribution or rights, and the amount and
character of such dividend, distribution or right
or the date on which the reclassification,
consolidation, merger, statutory share exchange,
<PAGE>
sale, transfer, change of control, dissolution,
liquidation or winding up is expected to become
effective, and the date as of which it is expected
that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock
for securities or other property deliverable upon
the reclassification, consolidation, merger,
statutory share exchange, sale, transfer, change of
control, dissolution, liquidation or winding up.
Failure to give any such notice or any defect in
the notice shall not affect the legality or
validity of the proceedings described in this
Subsection G(8).
(9) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times
reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the shares
of the Series A Stock, such number of its shares of
Common Stock as shall from time to time be
sufficient to effect the conversion of all
outstanding shares of the Series A Stock; and if at
any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding
shares of the Series A Stock, the Corporation will
take such corporate action as may, in the opinion
of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for
such purpose.
(10) Reorganization or Reclassification.
In case of any reclassification or change of
outstanding shares of Common Stock (other than a
change in par value, or as a result of a
subdivision or combination), or in case of any
consolidation of the Corporation with, or merger of
the Corporation with or into, any other entity that
results in a reclassification, change, conversion,
exchange or cancellation of outstanding shares of
Common Stock or any sale or transfer of all or
substantially all of the assets of the Corporation,
each holder of shares of Series A Stock then
outstanding shall have the right thereafter to
convert the shares of Series A Stock held by the
holder (in lieu of receiving the shares of Common
Stock immediately theretofore receivable upon
conversion of such shares of Series A Stock) into
the kind and amount of securities, cash and other
property which the holder would have been entitled
to receive upon such reclassification, change,
<PAGE>
consolidation, merger, sale or transfer if the
holder had held the Common Stock issuable upon the
conversion of the shares of Series A Stock
immediately prior to the reclassification, change,
consolidation, merger, sale or transfer.
H. Status of Redeemed or Cancelled Series A Stock.
Upon any conversion or redemption of shares of
Series A Stock, the shares of Series A Stock so
converted or redeemed shall have the status of
authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock which the
Corporation shall have authority to issue shall not
be decreased by the conversion or redemption of
shares of Series A Stock. The shares of Series A
Stock not redeemed pursuant to the provisions of
this Article Fourth shall remain outstanding and
entitled to all rights and preferences provided
herein.
I. Miscellaneous Rights and Restrictions of Series A
Stock.
(1) The Corporation will endeavor to list
the shares of Common Stock required to be delivered
upon conversion of the Series A Stock, prior to
their delivery, upon each national securities
exchange, if any, upon which the outstanding Common
Stock is listed at the time of delivery.
(2) The Corporation will pay any and all
documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery
of shares of Common Stock on conversion of the
Series A Stock pursuant hereto; provided, however,
that the Corporation shall not be required to pay
any tax which may be payable in respect of any
transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of
the holder of the Series A Stock to be converted
and no such issue or delivery of shares of Common
Stock in a name other than that of the holder of
the Series A Stock to be converted shall be made
unless and until the person requesting the issue or
delivery has paid to the Corporation the amount of
any such tax or has established to the satisfaction
of the Corporation that the tax has been paid.
(3) The holders of the Series A Stock will
not have any preemptive right to subscribe for or
purchase any shares or any other securities which
may be issued by the Corporation.
<PAGE>
(4) If any right, preference or limitation
of the Series A Stock set forth in this Certificate
of Incorporation is invalid, unlawful or incapable
of being enforced by reason of any rule or law or
public policy, all other rights, preferences and
limitations set forth in this Certificate of
Incorporation which can be given effect without the
invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless,
remain in full force and effect, and no right,
preference or limitation herein set forth shall be
deemed dependent upon any other such right,
preference or limitation unless so expressed
herein.
J. Non-Voting Common Stock. This Corporation shall
not authorize or issue any non-voting Common
Stock."
Except as may otherwise be required by law, no
other designations, preferences, limitations or
relative rights, were established for the benefit
of the Series A Stock other than those specifically
set forth in the amendment approved by the Board of
Directors and in the Restated Certificate of
Incorporation.
2. That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said
Corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the Amendment.
3. That said Amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Maxicare Health Plans,
Inc. has caused this certificate to be made and
signed by Peter J. Ratican, its President, and
attested to by Alan D. Bloom, its Secretary, this
9th day of March, 1992.
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Peter J. Ratican
ATTEST:
By: /s/ Alan D. Bloom
Alan D. Bloom, Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
HCS COMPUTER, INC.
INTO
MAXICARE HEALTH PLANS, INC.
* * * * * *
MAXICARE HEALTH PLANS, INC., a corporation organized
and existing under the laws of Delaware,
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on
the 5th day of January, 1981, pursuant to the Corporation Law of
the State of Delaware.
SECOND: That this corporation owns all of the
outstanding shares of the stock of HCS COMPUTER, INC., a
corporation incorporated on the 14th day of August, 1980,
pursuant to the Corporations Law of the State of California.
THIRD: That this corporation, by the following
resolutions of its Board of Directors, duly adopted at a meeting
held on the 30th day of October, 1992, determined to and did
merge into itself said HCS COMPUTER, INC.:
RESOLVED, that MAXICARE HEALTH PLANS, INC.
merge, and it hereby does merge into itself
said HCS COMPUTER, INC., and assumes all of
its obligations; and
FURTHER RESOLVED, that the merger shall be
effective on October 1, 1992 for tax purposes
only.
IN WITNESS WHEREOF, said MAXICARE HEALTH PLANS, INC.,
has caused this certificate to be signed by Peter Ratican, its
President, and attested by Alan Bloom, its Secretary, this 30th
day of October, 1992.
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter Ratican
Peter Ratican, President
ATTEST:
By: /s/ Alan Bloom
Alan Bloom, Secretary
<PAGE>
Certificate of Designation
of
Series B Preferred Stock
of
Maxicare Health Plans, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Maxicare Health Plans, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation") hereby certifies that the following
resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation
Law of the State of Delaware at a meeting duly called and held on
February 24, 1998.
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation in
accordance with the provisions of the Certificate of Amendment
of Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Series B Preferred Stock, with a par
value of $0.01 per share, of the Corporation and hereby states
the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof (in addition to the
provisions set forth in the Certificate of Amendment of Restated
Certificate of Incorporation which are applicable to the
Preferred Stock of all classes and series) as follows:
Section 1. Designation, Par Value and Amount.
The shares of such series shall be designated as "Series B
Preferred Stock" (hereinafter referred to as "Series B Preferred
Stock"), the shares of such series shall be with par value of
$0.01 per share, and the number of shares constituting such
series shall be 500,000, provided, however, that, if more than a
total of 500,000 shares of Preferred Stock shall be issuable
upon the exercise of Rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of February 24, 1998 between the
Corporation and American Stock Transfer and Trust Company, as
Rights Agent (as amended from time to time) (the "Rights
Agreement"), the Board of Directors of the Corporation, pursuant
to Section 151 of the General Corporation Law of the State of
Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged and filed
providing for the total number of shares of Series B Preferred
Stock authorized to be issued to be increased (to the extent that
the Certificate of Amendment of Restated Certificate of
Incorporation then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise
of the Rights.
<PAGE>
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior
rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to
the shares of Series B Preferred Stock with respect
to dividends, the holders of shares of Series B
Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of
assets legally available for the purpose,
commencing after the first issuance of a share or a
fraction of a share of Series B Preferred Stock, an
amount per share (rounded to the nearest cent)
equal to 500 times the aggregate per share amount
of all cash dividends, and 500 times the aggregate
per share amount (payable in kind) of all non-cash
dividends or other distributions declared and paid
to each share of Common Stock, par value $0.01 per
share of the Corporation (the "Common Shares')
(other than a dividend payable in shares of Common
Stock or a subdivision, or combination or
consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise). In the
event 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 than by payment of a dividend in shares
of Common Stock) 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 B
Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding
immediately after such event and the denominator of
which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a
dividend or distribution on the Series B Preferred
Stock as provided in paragraph (a) above
immediately after it declares a dividend or
distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
Section 3. Voting Rights. The holders of shares
of Preferred Stock shall have the following voting
rights:
<PAGE>
(a) Except as provided in paragraph (c)
of this Section 3 and subject to the provision for
adjustment hereinafter set forth, each share of
Series B Preferred Stock shall entitle the holder
thereof to 500 votes on all matters submitted to a
vote of the stockholders of the Corporation. In
the event 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 than by payment of a dividend in shares
of Common Stock) 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 B Preferred Stock were entitled
immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number of
shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein or
by law, the holders of shares of Series B Preferred
Stock and the holders of shares of Common Stock
shall vote together as one class on all matters
submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein (or as
otherwise required by applicable law), holders of
Series B Preferred Stock shall have no general or
special voting rights.
Section 4. Reacquired Shares. Any shares of
Series B 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 to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Certificate
of Amendment of Restated Certificate of Incorporation, in any
other Certificate of Amendment creating a series of Preferred
Stock or as otherwise required by law.
<PAGE>
Section 5. Liquidation, Dissolution or Winding
Up. Subject to the prior and superior rights of holders of any
shares of any series of preferred stock ranking prior and
superior to the shares of Series B Preferred Stock with respect
to rights upon liquidation, dissolution or winding up (voluntary
or otherwise), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up, including but not limited
to the Common Stock) to the Series B Preferred Stock unless,
prior thereto the holders of the Series B Preferred Stock shall
have received $100.00 per share (the "Series B Liquidation
Preference"). Following, the full amount of the Series B
Liquidation Preference, the holders of Series B Preferred Stock
and holders of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio for each share of Preferred Stock an amount 500 times
the amount distributed for each share of Common Stock.
Section 6. Consolidation, Merger, etc. In case
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 500
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
In t he event 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 than by payment of a dividend in shares of Common
Stock) 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 B Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Redemption.
(a) The Corporation shall have the right,
at any time, in its absolute and sole discretion
to redeem all but not less than all of Series B
Preferred Stock. The Corporation shall effect each
<PAGE>
such redemption by giving notice of its election to
redeem by at least twenty (20) days advance notice,
given by certified or registered mail, to the
holder of shares of Series B Preferred Stock at the
address appearing in the Corporation's register for
the Series B Preferred Stock. The redemption price
per share of Series B Preferred Stock shall be 500
shares of Common Stock, subject to the same
adjustment as provided for in Section 3(a) hereof.
(b) The Common Stock shall be paid to the
holder of shares of Series B Preferred Stock
redeemed within 30 business days of the delivery of
the notice of such redemption to such holders;
provided, however, that the Corporation shall not
be obligated to deliver any portion of such Common
Stock unless either the certificates evidencing the
shares of Series B Preferred Stock redeemed are
delivered to the Corporation or its transfer agent
for the Series B Preferred Stock, or the holder
notifies the Corporation or such transfer agent
that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to
the Corporation and such transfer agent to
indemnify the Corporation and such transfer agent
from any loss incurred by it in connection with
such certificates.
Section 8. Ranking. The Preferred Stock shall
rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide
otherwise.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Chief Executive
Officer and attested by its Secretary as of the 24th day of
February, 1998.
/s/ Peter J. Ratican
Name: Peter J. Ratican
Title: Chief Executive Officer
Attest:
/s/ Alan D. Bloom
Name: Alan D. Bloom
Title: Secretary
___________________________________________
MAXICARE HEALTH PLANS, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 24, 1998
___________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . 6
Section 3. Issuance of Right Certificates. . . . . . . . . 6
Section 4. Form of Right Certificate . . . . . . . . . . . 8
Section 5. Countersignature and Registration . . . . . . . 8
Section 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed
Lost or Stolen Right Certificate . . . . . . . 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . 10
Section 8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . 13
Section 9. Reservation and Availability of
Preferred Shares . . . . . . . . . . . . . . . 13
Section 10. Preferred Shares Record Date. . . . . . . . . . 14
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights . . . . . . 15
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . . . . . . . . . . . . . 22
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 23
Section 14. Fractional Rights and Fractional Shares . . . . 25
Section 15. Rights of Action. . . . . . . . . . . . . . . . 27
Section 16. Agreement of Right Holders. . . . . . . . . . . 27
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . 28
Section 18. Concerning the Rights Agent . . . . . . . . . . 29
<PAGE>
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . 29
Section 20. Duties of Rights Agent. . . . . . . . . . . . . 30
Section 21. Change of Rights Agent. . . . . . . . . . . . . 32
Section 22. Issuance of New Right Certificates. . . . . . . 33
Section 23. Redemption and Termination. . . . . . . . . . . 34
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . 36
Section 25. Notice of Certain Events. . . . . . . . . . . . 37
Section 26. Notices . . . . . . . . . . . . . . . . . . . . 38
Section 27. Supplements and Amendments. . . . . . . . . . . 38
Section 28. Determination and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . . . . 39
Section 29. Successors. . . . . . . . . . . . . . . . . . . 40
Section 30. Benefits of this Agreement. . . . . . . . . . . 40
Section 31. Severability. . . . . . . . . . . . . . . . . . 40
Section 32. Governing Law . . . . . . . . . . . . . . . . . 40
Section 33. Counterparts. . . . . . . . . . . . . . . . . . 40
Section 34. Descriptive Headings. . . . . . . . . . . . . . 40
Exhibits
A . . . . . . Certificate of Designation of Series B Preferred
Stock of Maxicare Health Plans, Inc.
B . . . . . . Form of Right Certificate, Form of Assignment, and
Form of Election to Purchase
C . . . . . . Summary of Rights Agreement
<PAGE>
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person . . . . . . . . . . . . . . . . . . Section 1(a)
Act. . . . . . . . . . . . . . . . . . . . . . . . . Section 1(b)
Adjustment Shares. . . . . . . . . . . . . . . .Section 11(a)(ii)
Adjusted Number of Shares. . . . . . . . . . . Section 11(a)(iii)
Adjusted Purchase Price. . . . . . . . . . . . Section 11(a)(iii)
Affiliate. . . . . . . . . . . . . . . . . . . . . . Section 1(c)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . .Preface
Associate. . . . . . . . . . . . . . . . . . . . . . Section 1(c)
Beneficial Owner . . . . . . . . . . . . . . . . . . Section 1(d)
Beneficially Own . . . . . . . . . . . . . . . . . . Section 1(d)
Business Day . . . . . . . . . . . . . . . . . . . . Section 1(e)
Capital Stock Equivalent . . . . . . . . . . . Section 11(a)(iii)
Close of Business. . . . . . . . . . . . . . . . . . Section 1(f)
Common Shares. . . . . . . . . . . . . . . . . . . . Section 1(g)
Continuing Directors. . . . . . . . . . . . . . . . Section 1(h)
Corporation. . . . . . . . . . . . . . . . . . . . . . . .Preface
Current Per Market Price . . . . . . . . . . . . Section 11(d)(i)
Current Per Share Market Price . . . . . . . . . Section 11(d)(i)
Disinterested Directors. . . . . . . . . . . . . . . Section 1(i)
Distribution Date. . . . . . . . . . . . . . . . . . Section 3(a)
Equivalent Preferred Shares. . . . . . . . . . . . .Section 11(b)
Exchange Act . . . . . . . . . . . . . . . . . . . . Section 1(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . .Section 24(a)
Final Expiration Date. . . . . . . . . . . . . . . . Section 7(a)
Grandfathered Stockholder . . . . . . . . . . . . . Section 1(l)
Interested Stockholder . . . . . . . . . . . . . . . Section 1(m)
Nasdaq . . . . . . . . . . . . . . . . . . . . . Section 11(d)(i)
Permitted Offer. . . . . . . . . . . . . . . . . . . Section 1(n)
Person . . . . . . . . . . . . . . . . . . . . . . . Section 1(o)
Preferred Shares . . . . . . . . . . . . . . . . . . Section 1(p)
Principal Party. . . . . . . . . . . . . . . . . . .Section 13(b)
Proration Factor . . . . . . . . . . . . . . . Section 11(a)(iii)
Purchase Price . . . . . . . . . . . . . . . . . . . Section 4(a)
Record Date. . . . . . . . . . . . . . . . . . . . . . . .Preface
Redemption Date. . . . . . . . . . . . . . . . . . . Section 7(a)
Redemption Price . . . . . . . . . . . . . . . . Section 23(a)(i)
Right. . . . . . . . . . . . . . . . . . . . . . . . . . .Preface
Right Certificate. . . . . . . . . . . . . . . . . . Section 3(a)
Rights Agent . . . . . . . . . . . . . . . . . . . . . . .Preface
Section 11(a)(ii) Event. . . . . . . . . . . . . . . Section 1(r)
Section 13 Event . . . . . . . . . . . . . . . . . . Section 1(s)
Security . . . . . . . . . . . . . . . . . . . . Section 11(d)(i)
Shares Acquisition Date. . . . . . . . . . . . . . . Section 1(t)
Subsidiary . . . . . . . . . . . . . . . . . . . . . Section 1(u)
Summary of Rights Agreement. . . . . . . . . . . . . Section 3(b)
Then Outstanding . . . . . . . . . . . . . . . . . . Section 1(d)
Trading Day. . . . . . . . . . . . . . . . . . . Section 11(d)(i)
<PAGE>
Transaction. . . . . . . . . . . . . . . . . . . . . Section 1(v)
Transaction Person . . . . . . . . . . . . . . . . . Section 1(w)
Triggering Event . . . . . . . . . . . . . . . . . . Section 1(x)
Voting Securities. . . . . . . . . . . . . . . . . .Section 13(a)
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 24, 1998 (the
"Agreement"), between Maxicare Health Plans, Inc., a Delaware
corporation (the "Corporation"), and American Stock Transfer &
Trust Company, a New York corporation (the "Rights Agent").
The Board of Directors of the Corporation has authorized
and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Corporation outstanding at the close of business on March 16,
1998 (the "Record Date"), each Right representing the right to
purchase one five-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set
forth, 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 earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to Common Shares that
shall become outstanding after the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration Date
in accordance with the provisions of Section 22 of this
Agreement.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person
who or which, together with all Affiliates and Associates of such
Person, without the prior approval of at least a majority of the
Disinterested Directors (as hereinafter defined), shall be the
Beneficial Owner of 15% or more of the then outstanding Common
Shares (other than as a result of a Permitted Offer (as
hereinafter defined)) or was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be
the Beneficial Owner of 15% or more of the then outstanding
Common Shares. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Corporation, (ii)
any Subsidiary of the Corporation, (iii) any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation,
(iv) any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan,
(v) any Person, who or which together with all Affiliates and
Associates of such Person becomes the Beneficial Owner of 15% or
<PAGE>
more of the then outstanding Common Shares as a result of the
acquisition of Common Shares directly from the Corporation, or
(vi) any Grandfathered Stockholder: provided, however, that if,
(X) without the prior approval of at least a majority of the
Disinterested Directors, any Grandfathered Stockholder acquires
additional Common Shares (other than Common Shares acquired
directly, or options or convertible securities to acquire Common
Shares directly from the Corporation) after the date hereof and
such Grandfathered Stockholder's Beneficial Ownership of Common
Stock exceeds 20% of the Common Shares outstanding or (Y) any
Grandfathered Stockholder files a Schedule 13D with the
Securities and Exchange Commission disclosing that the
Grandfathered Stockholder now holds the Common Shares with any
purpose, or with the effect of, changing or influencing the
control of the Corporation, or in connection with or as a
participant in any transaction having such purpose or effect,
including any tran saction under Rule 13d-3(b) under the
Securities Exchange Act of 1934 (the "Exchange Act") and such
Grandfathered Stockholder's Beneficial Ownership of Common Shares
equals 15% or more, then such Grandfathered Stockholder shall
become an Acquiring Person, and (B) no Person shall be deemed to
be an "Acquiring Person" either (X) as a result of the
acquisition of Common Shares by the Corporation which, by
reducing the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person;
except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (X)) as a result of the
acquisition of Common Shares by the Corporation, and (ii) after
such share acquisition by the Corporation, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if (i) within 5 business days
after such Person would otherwise have become an Acquiring Person
(but for the operation of this subclause (Y)), such Person
notifies the Board of Directors that such Person did so
inadvertently and (ii) within the latter of (a) 2 Business Days
after such notification or (b) 20 Business Days after such
notification unless the Disinterested Directors notifies such
Person in writing that they have determined (which determination
may be based on any public statement or filing of such Person)
that such Person acquired the Common Shares with the purpose, or
with the effect of, changing or influencing the control of the
Corporation, or in connection with or as a participant in any
transaction having such purpose or effect, including any
transaction under Rule 13d-3(b) under the Exchange Act, such
Person is the Beneficial Owner of less than 15% of the
outstanding Common Shares.
(b) "Act" shall mean the Securities Act of
1933, as amended.
<PAGE>
(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
amended provided that the limited partners of a limited
partnership shall not be deemed to be Associates of such limited
partnership solely by virtue of their limited partnership
interest.
(d) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable or convertible immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedules 13D or 13G under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities) relating to the
acquisition, holding, voting (except to the extent contemplated
by the proviso to Section l(d)(ii)(B)) or disposing of any
securities of the Corporation.
<PAGE>
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding", when
used with reference to a Person's Beneficial Ownership of
securities of the Corporation, shall mean the number of such
securities then issued and out-standing 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 U.S. federal holiday.
(f) "Close of Business" on any given date
shall mean 5:00 P.M., New York time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference
to the Corporation shall mean the shares of Common Stock, par
value $0.01 per share, of the Corporation or, in the event of a
subdivision, combination or consolidation with respect to such
shares of Common Stock, the shares of Common Stock resulting from
such subdivision, combination or consolidation. "Common Shares"
when used with reference to any Person other than the Corporation
shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(h) "Continuing Director" shall mean a Person
who was a member of the Board of Directors of the Corporation
elected by the public stockholders of the Corporation prior to
the date hereof, or a Person recommended to succeed a Continuing
Director by a majority of Continuing Directors.
(i) "Disinterested Directors" shall mean the
members of the Board of Directors who are Continuing Directors
and who are not (i) officers or employees of the Corporation,
(ii) Acquiring Persons or their Affiliates or Associates or
representatives of any of them, or (iii) any Person who was
directly or indirectly proposed or nominated as a director of the
Corporation by an Acquiring Person or a Transaction Person.
(j) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(k) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
<PAGE>
(l) "Grandfathered Stockholder" shall mean
any Person who as of the date hereof has filed a Schedule 13G
with the Securities and Exchange Commission disclosing Beneficial
Ownership by such Person and his Affiliates and Associates of
more than 15% of the Common Shares.
(m) "Interested Stockholder" shall mean any
Acquiring Person or any Affiliate or Associate of any Acquiring
Person or any other Person in which any such Acquiring Person,
Affiliate or Associate has an interest, or any other Person
acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.
(n) "Permitted Offer" shall mean a tender or
exchange offer which is for all outstanding Common Shares at a
price and on terms determined, prior to the purchase of shares
under such tender or exchange offer, by at least a majority of
the Disinterested Directors, to be adequate (taking into account
all factors that such Disinterested Directors deem relevant
including, without limitation, prices that could reasonably be
achieved if the Corporation or its assets were sold on an orderly
basis designed to realize maximum value) and otherwise in the
best interests of the Corporation and its stockholders (other
than the Person or any Affiliate or Associate thereof on whose
basis the offer is being made) taking into account all factors
that such Disinterested Directors may deem relevant.
(o) "Person" shall mean any individual, firm,
partnership, corporation, limited liability company, trust,
association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(p) "Preferred Shares" shall mean shares of
Series B Preferred Stock, with a par value of $0.01 per share of
the Corporation having the relative rights, preferences and
limitations set forth in the Form of Certificate of Designation
of Series B Preferred Stock of Maxicare Health Plans, Inc.
attached to this Agreement as Exhibit A.
(q) "Redemption Date" shall have the meaning
set forth in Section 7 hereof.
(r) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(s) "Section 13 Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a) hereof.
<PAGE>
(t) "Shares Acquisition Date" shall mean the
first date of public announce- ment (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to the Exchange Act) by the Corporation or an Acquiring
Person that an Acquiring Person has become such; provided, that,
if such Person is determined not to have become an Acquiring
Person pursuant to Section l(a)(B)(Y) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(u) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
(v) "Transaction" shall mean any merger,
consolidation or sale of assets or earning power described in
Section 13(a) hereof or any acquisition of shares of Common Stock
of the Company which would result in a Person becoming a
Transaction Person.
(w) "Transaction Person" with respect to a
Transaction shall mean (x) any Person who (i) is or will become
an Acquiring Person if the Transaction were to be consummated and
(ii) directly or indirectly proposed or nominated a director of
the Corporation which director is in office at the time of
consideration of the Transaction, or (y) an Affiliate or
Associate of such a Person.
(x) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
Corporation hereby appoints the Rights Agent to act as agent for
the Corporation and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
<PAGE>
(a) Until the earlier of (i) the Shares
Acquisition Date, or (ii) the close of business on the tenth day
(or such later date as may be determined by action of the
Corporation's Board of Directors) after the date of the
commencement by any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person
or entity organized, appointed or established by the Corporation
for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other
than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or of any Subsidiary of
the Corporation or any Person or entity organized, appointed or
established by the Corporation for or pursuant to the terms of
any such plan) to commence (which intention to commence remains
in effect for five Business Days after such announcement), a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the
case of both (i) and (ii), any such date which is after the date
of this Agreement and prior to the issuance of the Rights), the
earliest of such dates being herein referred to as the
"Distribution Date", (x) the Rights will be evidenced (subject to
the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in
connection with the transfer of the underlying Common Shares
(including a transfer to the Corporation); provided, however,
that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a
result of such tender offer. As soon as practicable after the
Distribution Date, the Corporation will prepare and execute, the
Rights Agent will countersign, and the Corporation will send or
cause to be sent by first-class, postage prepaid mail, to each
record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Corporation, a Right Certificate, substantially in
the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
<PAGE>
(b) As promptly as practicable following the
Record Date, the Corporation will send a copy of a Summary of
Rights Agreement, in substantially the form of Exhibit C hereto
(the "Summary of Rights Agreement"), by first-class, postage-
prepaid mail, to each record holder of Common Shares as of the
close of business on the Record Date, at the address of such
holder shown on the records of the Corporation. With respect to
certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights Agreement attached
thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights
Agreement attached thereto, shall also constitute the transfer of
the Rights associated with such Common Shares.
(c) Certificates for Common Shares which
become outstanding (including, without limitation, reacquired
Common Shares referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date, shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Maxicare Health Plans, Inc. and
American Stock Transfer & Trust Company , dated as of
February 24, 1998 (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 Maxicare Health Plans, 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.
Maxicare Health Plans, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement)
and certain related persons, whether currently held by or
on behalf of such Person or by any subsequent holder, may
become null and void.
<PAGE>
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases
or acquires any Common Shares after the Record Date but prior to
the Distribution Date, any Rights associated with such Common
Shares shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificate.
(a) The Right Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) may have such marks of identification or
designation and such legends, summaries or endorsements printed
thereon as the Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange or trading market on which the Rights may
from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such
number of one five-hundredths of a Preferred Share as shall be
set forth therein at the price per one five-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights which
are null and void pursuant to Section 7(e) of this Agreement and
any Right Certificate issued pursuant to Section 6 or Section 11
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 are null and void.
<PAGE>
Provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Right Certificate.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Corporation
by its Chief Executive Officer, its President, any of its Vice
Presidents, either manually or by facsimile signature, shall have
affixed thereto the Corporation's seal or a facsimile thereof,
and shall be attested by the Chief Financial Officer, Secretary
or an Assistant Secretary of the Corporation, either manually or
by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Corporation who shall have signed any of the Right Certificates
shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and deliver y
by the Corporation, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the
Corporation with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such
officer of the Corporation; and any Right Certificate may be
signed on behalf of the Corporation by any person who, at the
actual date of the execution of such Right Certificate, shall be
a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of such Right
Certificate or transfer, books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the certificate number and the date
of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificate. Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to
the close of business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one five-
hundredths of a Preferred Share (or, following a Triggering
Event, other securities, as the case may be) as the Right
<PAGE>
Certificate or Right Certificates surrendered then entitle such
holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Corporation shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Corporation shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as
so requested. The Corporation may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(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 and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office or offices
of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price for the total number of
one five-hundredths of a Preferred Share (or other securities, as
<PAGE>
the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the close of
business on February 23, 2008 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date") or (iii) the time at
which the Rights are exchanged pursuant to Section 24 hereof.
(b) The Purchase Price for each one five-
hundredth of a Preferred Share pursuant to the exercise of a
Right shall initially be $45.00, shall be subject to adjustment
from time to time as provided in the next sentence and in
Sections 11 and 13(a) hereof and shall be payable in accordance
with paragraph (c) below. Anything in this Agreement to the
contrary notwithstanding, in the event that at any time after the
date of this Agreement and prior to the Distribution Date, the
Corporation shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares,
then in any such case, each Common Share outstanding following
such subdivision, combination or consolidation shall continue to
have a Right associated therewith and the Purchase Price
following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price
immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.
The adjustment provided for in the preceding sentence shall be
made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares (or other
securities, as the case may be) 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 6
hereof by certified check, cashier's check or money order payable
to the order of the Corporation, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares
to be purchased and the Corporation hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if
the Corporation, in its sole discretion, shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights
<PAGE>
hereunder into a depository, requisition from the depository
agent depository receipts representing such number of one five-
hundredths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depository agent) and the Corporation will direct the depository
agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right
Certificate. In the event that the Corporation is obligated to
issue other securities (including Common Shares) of the
Corporation pursuant to Section 11(a) hereof, the Corporation
will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if
and when appropriate.
In addition, in the case of an exercise of the Rights by
a holder pursuant to Section 11(a)(ii), the Rights Agent shall
return such Right Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Right Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such
Right Certificate were so exercised, the Rights Agent shall
indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
(d) In case the registered holder of any
Right Certificate shall exercise (except pursuant to Section
11(a)(ii)) less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of
Section 14 hereof, or the Rights Agent shall place an appropriate
notation on the Right Certificate with respect to those Rights
exercised.
<PAGE>
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of
a Section 11(a)(ii) Event, any Rights beneficially owned by (i)
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Corporation has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the
avoidance of this Section 7(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
Corporation shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) 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 an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the
Corporation shall be obligated to undertake any action with
respect to a registered holder upon the o ccurrence of any
purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set
forth on the reverse side of the Right Certificate surrendered
for such exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Corporation shall
reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise (other than a partial exercise), transfer, split up,
combination or exchange shall, if surrendered to the Corporation
or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the
Rights Agent, shall be canceled by it and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Corporation
shall deliver to the Rights Agent for cancellation and
<PAGE>
retirement, and the Rights Agent shall so cancel and retire, any
other Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Corporation, or
shall, at the written request of the Corporation, destroy such
canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Corporation.
Section 9. Reservation and Availability of Preferred
Shares. The Corporation covenants and agrees that at all times
prior to the occurrence of a Section 11(a)(ii) Event it will
cause to be reserved and kept available out of its authorized and
unissued Preferred Shares, or any authorized and issued 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 and, after the occurrence of a Section
11(a)(ii) Event, shall, to the extent reasonably practicable, so
reserve and keep available a sufficient number of Common Shares
(and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares or any
other securities) issuable upon the exercise of the Rights may be
listed on any national securities exchange or quoted on National
Association of Securities Dealers, Inc. Automated Quotations
System ("Nasdaq"), the Corporation shall use its best efforts to
cause, from and after such time as the Rights become exercisable,
all shares (or other securities) reserved for such issuance to be
listed on such exchange upon official notice of issuance or
quoted on Nasdaq upon such exercise.
The Corporation covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred
Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable shares or
securities.
The Corporation further covenants and agrees that it will
pay when due and payable any and all U.S. 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 Common Shares and/or other securities, as
the case may be) upon the exercise of Rights. The Corporation
shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery
of certificates or depository receipts for the Preferred Shares
<PAGE>
(or Common Shares and/or other securities, as the case may be) in
a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to
issue or to deliver any certificates or depository receipts for
Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or
until it has been established to the Corporation's reasonable
satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file,
as soon as practicable following the Shares Acquisition Date, a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act and
the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11(a)(ii). The
Corporation will also take such action as may be appropriate
under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each
person in whose name any certificate for Preferred Shares (or
Common Shares and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if
the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as
the case may be) transfer books of the Corporation are closed,
such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer
books of the Corporation are open.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
<PAGE>
(a) (i) In the event the Corporation
shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in
which the Corporation is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the
Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par v alue of
the shares of capital stock of the Corporation issuable upon
exercise of one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or
together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so that
each holder of a Right (except as provided below and in Section
7(e) hereof) shall, for a period of 60 days after the later of
the occurrence of any such event or the effective date of an
appropriate registration statement under the Act pursuant to
Section 9 hereof, have a right to receive, upon exercise thereof
at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of
Common Shares (or, in the discretion of the Board of Director one
five-hundredths of a Preferred Share) as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the then number of one five-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and dividing that
product by (y) 50% of the then current per share market price of
the Corporation's Common Shares (determined pursuant to Section
<PAGE>
11(d) hereof) on the date of such first occurrence (such number
of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not
be sufficient treasury shares or authorized but unissued (and
unreserved) Common Shares to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) and the
Rights become so exercisable (and the Board has determined not to
make the Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right
shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, (x) a number of (or fractions of) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (y) one five-hundredth of a Preferred
Share or a number of, or fractions of other equity securities of
the Corporation (or, in the discretion of the Board of Directors,
debt) which the Board of Directors of the Corporation has
determined to have the same aggregate current market value
(determined pursuant to Section 11(d)(i) and (ii) hereof, to the
extent applicable,) as one Common Share (such number of, or
fractions of, Preferred Shares, debt, or other equity securities
or debt of the Corporation being referred to as a "capital stock
equivalent"), equal in the aggregate to the number of Adjustment
Shares; provided, however, if sufficient Common Shares and/or
capital stock equivalents are unavailable, then the Corporation
shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional Common Shares
or capital stock equivalents for issuance upon exercise of the
Rights, including the calling of a meeting of stockholders; and
provided, further, that if the Corporation is unable to cause
sufficient Common Shares and/or capital stock equivalents to be
available for issuance upon exercise in full of the Rights, then
each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise at the Adjusted Purchase
Price (as such terms are hereinafter defined). As used herein,
the ter m "Adjusted Number of Shares" shall be equal to that
number of (or fractions of) Common Shares (and/or capital stock
equivalents) equal to the product of (x) the number of Adjustment
Shares and (y) a fraction, the numerator of which is the number
of Common Shares (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of which
is the aggregate number of Adjustment Shares otherwise issuable
upon exercise in full of all Rights (assuming there were a
sufficient number of Common Shares available) (such fraction
being referred to as the "Proration Factor"). The "Adjusted
<PAGE>
Purchase Price" shall mean the product of the Purchase Price and
the Proration Factor. The Board of Directors may, but shall not
be required to, establish procedures to allocate the right to
receive Common Shares and capital stock equivalents upon exercise
of the Rights among holders of Rights.
(b) In case the Corporation shall fix a
record date for the issuance of rights (other than the Rights),
options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less than
the then current per share market price of the Preferred Shares
(as determined pursuant to Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the 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 Corporation issuable upon exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash or as part of a unit, the value of such consideration or
components of a unit shall be determined in good faith by the
Board of Directors of the Corporation, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent. Preferred Shares owned by or
held for the account of the Corporation shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
<PAGE>
(c) In case the Corporation 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
Corporation is the continuing or surviving corporation) of
evidences of indebtedness or assets or subscription right s or
warrants (excluding those referred to in Section 11(b) hereof and
excluding cash dividends), 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 (as determined pursuant to Section 11(d)
hereof) of the Preferred Shares on such record date, less the
fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on 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 Corporation to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) (i) For the purpose of any
computation hereunder, the "current per share market price" of
any security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty
(30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the
Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration
of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
<PAGE>
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by the Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the
Corporation. If on any such date no such market maker is making
a market in the Security, the fair value of the Security on such
date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange or Nasdaq
on which the Security is listed or admitted to trading or is
quoted is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange or Nasdaq, a Business Day.
(ii) For the purpose of any
computation hereunder, the "current per share market price" of
the Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares
are not publicly traded, the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by five hundred. If neither
the Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board
of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
<PAGE>
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one five-hundredths of a Preferred Share or one whole
share of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Final
Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder
of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Corporation other than
Preferred Shares, thereafter the number of other shares so
receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 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
Corporation subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one five-hundredths of a
Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.
(h) The Corporation may elect on or after the
date of any adjustment of the Purchase Price to adjust the number
of Rights, in lieu of any adjustment in the number of one five-
hundredths of a Preferred Share purchasable upon the exercise of
a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one
five-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
five-hundredth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately af ter adjustment of the
Purchase Price. The Corporation 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,
<PAGE>
shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
11(h), the Corporation shall, as promptly as practicable, cause
to be distributed to holders of record of Right Certificates on
such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the
option of the Corporation, 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
Corporation, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(i) Irrespective of any adjustment or change
in the Purchase Price or the number of one five-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one five-
hundredths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause
an adjustment reducing the Purchase Price below the then par
value, if any, of the number of one five-hundredths of a
Preferred Share, Common Shares or other securities issuable upon
exercise of the Rights, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue such
number of fully paid and non-assessable one five-hundredths of a
Preferred Share, Common Shares or other securities at such
adjusted Purchase Price.
(k) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Corporation may elect to defer until the occurrence of such event
the issuance to the holder of any Right exercised after such
record date the Preferred Shares, Common Shares or other
securities of the Corporation, if any, issuable upon such
exercise over and above the Preferred Shares, Common Shares or
other securities of the Corporation, if any, issuable upon
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Corporation shall
<PAGE>
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the
contrary notwithstanding, the Corporation shall be entitled to
make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that (i) any consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred
Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares,
(iv) stock dividends or (v) issuance of rights, optio ns or
warrants referred to in this Section 11, hereafter made by the
Corporation to holders of its Preferred Shares shall not be
taxable to such stockholders.
(m) The Corporation covenants and agrees that
it shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Section 11(n)
hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which does not
violate Section 11(n) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction,
or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which does not
violate Section 11(n) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or
agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Corporation and such other
Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section
11(m).
<PAGE>
(n) The Corporation covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to, or if
at the time such action is taken it is reasonably foreseeable
that the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(o) The exercise of Rights under Section
11(a)(ii) shall only result in the loss of rights under Section
11(a)(ii) to the extent so exercised and shall not otherwise
affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13 hereof, the Corporation shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed
to have knowledge of such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.
(a) In the event that, on or following the
Shares Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into, any
Interested Stockholder or, if in such merger or consolidation all
holders of Common Stock are not treated alike, any other Person,
(y) the Corporation shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all
holders of C ommon Stock are not treated alike, any other Person,
and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a
case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities
generally entitled to vote in the election of directors ("voting
securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into securities of the surviving entity)
all of the voting securities of the Corporation or such surviving
<PAGE>
entity outstanding immediately after such merger or consolidation
and the holders of such securities not having changed as a result
of such merger or consolidation), or (z) the Corporation shall
sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any Interested Stockholder
or Stockholders or, if in such transaction all holders of Common
Stock are not treated alike, any other Person (other than the
Corporation or any Subsidiary of the Corporation in one or more
transactions each of which does not violate Sections 11(m) or
11(n) hereof), then, and in each such case (except as provided in
Section 13(d) hereof), proper provision shall be made so that (i)
each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement and in lieu
of Preferred Shares, such number of freely tradeable Common
Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
five-hundredths of a Preferred Share for which a Right is then
exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) and dividing that
product by (B) 50% of the then current per share market price of
the Common Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be
deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a
Section 13 Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the
consummation of any such transaction 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.
(b) "Principal Party" shall mean
<PAGE>
(i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any securities into which
Common Shares of the Corporation are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation
(including, if applicable, the Corporation if it is the surviving
corporation); and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the greatest portion of
the assets or earning power transferred p ursuant to such
transaction or transactions; provided, however, that in any of
the foregoing cases, (1) if the Common Shares of such Person are
not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such
other Person; (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Shares of two
or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value; and
(3) in case such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Corporation shall not consummate any
such consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Corporation and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense
shall:
<PAGE>
(i) prepare and file a registration
statement under the Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify
or register the Rights and the securities purchasable upon
exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party which
comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or con- solidations or sales or other
transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under Section
11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be applicable to
a transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a Permitted Offer
(or a wholly owned Subsidiary of any such Person or Persons);
(ii) the price per Common Share offered in such transaction is
not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of consideration offered in
such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to
issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
<PAGE>
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
sale price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Corporation. If on any such
date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to
issue fractions of Preferred Shares (other than fractions which
are one five-hundredths or integral multiples of one five-
hundredths of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are one five-hundredth or
integral multiples of one five-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one five-
hundredths of a Preferred Share may, at the election of the
Corporation, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Corporation and a depository
selected by it; provided that such agreement shall provide that
the holders of such depository receipts shall have the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that
are not one five-hundredth or integral multiples of one five-
hundredth of a Preferred Share, the Corporation shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For the purposes of this Section 14(b), the current market value
of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
<PAGE>
(c) Following the occurrence of one of the
transactions or events specified in Section 11 giving rise to the
right to receive Common Shares, capital stock equivalents (other
than Preferred Shares) or other securities upon the exercise of a
Right , the Corporation shall not be required to issue fractions
of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu
of fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Corporation may pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a share or
unit of such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one five-hundredths of a Preferred Share.
(d) The holder of a Right by the acceptance
of the Right expressly waives his right to receive any fractional
Rights or any fractional share upon exercise of a Right (except
as provided above).
Section 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Corporation to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this
Agreement and 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.
<PAGE>
Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the transfer
of the Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f)
hereof, the Corporation and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Corporation or the
Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Corporation nor the
Rights Agent shall have any liability to any holder of a Right or
a beneficial interest in 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 Corporation must use its
best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Corporation which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
<PAGE>
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Corporation or
any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The
Corporation 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 Corporation 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. The indemnity provided
for herein shall survive the expiration of the Rights and the
termination of this Agreement.
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 for other securities of
the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. 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
stock transfer of all or substantially all of 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
<PAGE>
the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes only those duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Corporation 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 Corporation), 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 (including, without limitation,
the identity of an Acquiring Person and the determination of the
current market price of any Security) be proved or established by
the Corporation 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 Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Secretary of the
<PAGE>
Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for
or by reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates (except
its countersignature on such Right Certificates) or be required
to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Corporation 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 7(e)
hereof) or any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of the certificate described in
Section 12 hereof); 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, Common Shares or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares, Common Shares
or other securities will, when issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Corporation 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.
<PAGE>
(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 Chief Executive
Officer, the President, any Vice President, the Chief Financial
Officer or the Secretary of the Corporation, and to apply to such
officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights
Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on or after which such action shall
be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five Business Days after the
date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the
Corporation or become pecuniarily interested in any transaction
in which the Corporation may be interested, or contract with or
lend money to the Corporation 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 Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Corporation
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
<PAGE>
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has not been completed,
the Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first consulting
with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days notice in
writing mailed to the Corporation and to each transfer agent of
the Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class
mail. The Corporation may remove the Rights Agent or any
successor Rights Agent upon sixty (60) days notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to 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 Corporation shall appoint a successor to
the Rights Agent. If the Corporation shall fail to make such
appointment within a period of sixty (60) days after giving
notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any
state of the United States in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority. 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
<PAGE>
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 Corporation shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue
new Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, the
Corporation (a) shall with respect to Common Shares so issued or
sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the
Corporation, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Corporation,
issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) the Corporation shall not be obligated to issue
any such Right Certificates if, and to the extent that, the
Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate
would be issued, and (ii) no Right Certificate shall be issued
if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the
Corporation (provided such approval also includes the approval of
a majority of Disinterested Directors), may, at its option,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend
<PAGE>
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"), at any time prior to the earlier of (x) the occurrence
of a Section 11(a)(ii) Event, or (y) the Final Expiration Date.
The Corporation may, at its option, pay the Redemption Price
either in Common Shares, (based on the "current per share market
price," as defined in Section 11(d) hereof, of the Common Shares
at the time of redemption) or cash; provided that if the
Corporation elects to pay the Redemption Price in Common Shares,
the Corporation shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each
holder of Rights shall be rounded up to the next whole share.
(ii) In addition, the Board of
Directors of the Corporation may, at its option, at any time
following the occurrence of a Section 11(a)(ii) Event and the
expiration of any period during which the holder of Rights may
exercise the rights under Section 11(a)(ii) but prior to any
Section 13 Event redeem all but not less than all of the then
outstanding Rights at the Redemption Price (x) in connection with
any merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets or
earning power aggregating 50% or more of the assets or earning
power of the Corporation and its Subsidiaries (taken as a whole)
in which all holders of Common Shares are treated alike and not
involving (other than as a holder of Common Shares being treated
like all other such holders) an Interested Stockholder or a
Transaction Person or (y)(aa) if and for so long as the Acquiring
Person is not thereafter the Beneficial Owner of 15% of the
Common Shares, and (bb) at the time of redemption no other
Persons are Acquiring Persons.
(iii) Notwithstanding anything to the
contrary in this Agreement, including, without limitation, the
provisions of Section 23(a)(i) and (ii), in the event that a
majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or action
by written consent, and/or (ii) successors of such persons
elected to the Board of Directors for the purpose of either
facilitating a Transaction with a Transaction Person or
circumventing directly or indirectly the provisions of this Sec
tion 23(a)(iii), then (1) the Rights may not be redeemed for a
period of 180 days following the effectiveness of such election
if such redemption is reasonably likely to have the purpose or
effect of facilitating a Transaction with a Transaction Person
and (2) the Rights may not be redeemed following such 180 day
period if (x) such redemption is reasonably likely to have the
purpose of facilitating a Transaction with a Transaction Person
and (y) during such 180 day period, the Corporation enters into
<PAGE>
any agreement, arrangement or understanding with any Transaction
Person which is reasonably likely to have the purpose or effect
of facilitating a Transaction with any Transaction Person.
(b) In the case of a redemption permitted
under Section 23(a)(i) and not prohibited by Section 23(a)(iii),
immediately upon the date for redemption set forth (or determined
in the manner specified in) in a resolution of the Board of
Directors of the Corporation ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights
Agent, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23(a)(ii) and not
prohibited by Section 23(a)(iii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the
Rights will terminate and represent only the right to receive the
Redemption Price upon the later of ten Business Days following
the giving of such notice or the expiration of any period during
which the rights under Section 11(a)(ii) may be exercised. The
Corporation shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption
set forth in a resolution of the Board of Directors ordering the
redemption of the Rights, the Corporation shall mail a notice of
redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Corporation nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23
and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
(c) The Corporation may, at its option,
discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption
of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent of the Common Shares,
and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by
the Corporation.
<PAGE>
Section 24. Exchange.
(a) The Board of Directors of the Corporation
(provided such approval also includes the approval of a majority
of Disinterested Directors) may, at its option, at any time after
any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions
of Sections 7(e) and 11(a)(ii) hereof) for Common Shares of the
Corporation at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or any
such Subsidiary, any entity holding Common Shares for or pursuant
to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common shares then outstanding.
(b) Immediately upon the action of the Board
of Directors of the Corporation ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise
such rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Corporation promptly
shall mail a notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Sections 7(e) and 11(a)(ii) hereof) held by
each holder of Rights.
<PAGE>
(c) In any exchange pursuant to this Section
24, the Corporation, at its option, may substitute Preferred
Shares (or equivalent preferred shares, as such term is defined
in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one five-
hundredth of a Preferred Share (or equivalent preferred share)
for each Common Share, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Shares pursuant
to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Common Share shall have the same voting
rights as one Common Share.
(d) In the event that there shall not be
sufficient Common Shares or Preferred Shares issued but not
outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the
Corporation shall take such action as may be necessary to
authorize additional Common Shares or Preferred Shares for
issuance upon exchange of the Rights.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall propose (i)
to pay any dividend payable in stock of any class to the holders
of its Preferred Shares or to make any other distribution to the
holders of its Preferred Shares, (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Secti on
11(n) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer) in one or more transactions, of 50% or more of
the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Corporation and/or any of its Subsidiaries) in
one or more transactions each of which does not violate Section
11(n) hereof, or (v) to effect the liquidation, dissolution or
winding up of the Corporation, then, in each such case, the
Corporation shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action to the extent feasible and file a certificate with the
Rights Agent to that effect, which shall specify the record date
for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
<PAGE>
or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least twenty (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,
whichever shall be the earlier.
(b) In case of a Section 11(a)(ii) Event,
then (i) the Corporation shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph (a) to
Preferred Shares shall be deemed thereafter to refer also to
Common Shares and/or, if appropriate, other securities of the
Corporation.
Section 26. 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 Corporation
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:
Maxicare Health Plans, Inc.
1149 South Broadway Street
Los Angeles, California 90015
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Corporation 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 Corporation) as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Corporate Trust
<PAGE>
Notices or demands authorized by this Agreement to be given or
made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Corporation.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Corporation and the Rights Agent shall, if
the Corporation so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing Common Shares provided that any such
supplement or amendment must be approved by a majority of the
Disinterested Directors. From and after the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation so
directs, supplement or amend this Agreement without the approval
of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions
hereunder in any manner which the Corporation may deem necessary
or desirable and which shall not adversely affect the interests
of the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares. Notwithstanding anything
contained in this Rights Agreement to the contrary, in the event
that a majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or written
consent, and/or (ii) successors of such persons elected to the
Board of Directors for the purpose of either facilitating a
Transaction with a Transaction Person or circumventing directly
or indirectly the provisions of this Section 27, then for a
period of 180 days following the effectiveness of such action,
this Rights Agreement shall not be amended or supplemented in any
manner reasonably likely to have the purpose or effect of
facilitating a Transaction with a Transaction Person.
<PAGE>
Section 28. Determination and Actions by the Board of
Directors, etc. The Board of Directors of the Corporation
(subject to any other specific provision of this Agreement
requiring the approval of the Disinterested Directors) shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the
Board, or the Corporation, or as may be necessary or advisable in
the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions
of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement and whether any
proposed amendment adversely affects the interests of the holders
of Right Certificates). For all purposes of this Agreement, any
calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common
Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of
this Agreement (except as provided in Section 1(d)). All such
actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and
binding on the Corporation, the Rights Agent, the holders of the
Right Certificates and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Right
Certificates.
Section 29. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Corporation, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares).
<PAGE>
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each
Right and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
MAXICARE HEALTH PLANS, INC.
Attest:
By /s/ Alan D. Bloom By /s/ Peter J. Ratican
Name: Alan D. Bloom Name: Peter J. Ratican
Title: Secretary Title: President
AMERICAN STOCK TRANSFER &
TRUST COMPANY
Attest:
By /s/ Susan Silber By /s/ Herbert J. Lemmer
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
<PAGE>
Exhibit A
Certificate of Designation
of
Series B Preferred Stock
of
Maxicare Health Plans, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Maxicare Health Plans, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation") hereby certifies that the following
resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the General Corporation
Law of the State of Delaware at a meeting duly called and held on
February 24, 1998.
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation in
accordance with the provisions of the Certificate of Amendment
of Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Series B Preferred Stock, with a par
value of $0.01 per share, of the Corporation and hereby states
the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof (in addition to the
provisions set forth in the Certificate of Amendment of Restated
Certificate of Incorporation which are applicable to the
Preferred Stock of all classes and series) as follows:
Section 1. Designation, Par Value and Amount. The
shares of such series shall be designated as "Series B Preferred
Stock" (hereinafter referred to as "Series B Preferred Stock"),
the shares of such series shall be with par value of $0.01 per
share, and the number of shares constituting such series shall be
500,000, provided, however, that, if more than a total of 500,000
shares of Preferred Stock shall be issuable upon the exercise of
Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of February 24, 1998 between the Corporation and
American Stock Transfer and Trust Company, as Rights Agent (as
amended from time to time) (the "Rights Agreement"), the Board of
Directors of the Corporation, pursuant to Section 151 of the
General Corporation Law of the State of Delaware, shall direct by
resolution or resolutions that a certificate be properly
executed, acknowledged and filed providing for the total number
of shares of Series B Preferred Stock authorized to be issued to
be increased (to the extent that the Certificate of Amendment of
Restated Certificate of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of the Rights.
<PAGE>
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights
of the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series B Preferred
Stock with respect to dividends, the holders of shares of Series
B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of assets legally
available for the purpose, commencing after the first issuance of
a share or a fraction of a share of Series B Preferred Stock, an
amount per share (rounded to the nearest cent) equal to 500 times
the aggregate per share amount of all cash dividends, and 500
times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions declared and paid to
each share of Common Stock, par value $0.01 per share of the
Corporation (the "Common Shares') (other than a dividend payable
in shares of Common Stock or a subdivision, or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise). In the event 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 than by payment of a
dividend in shares of Common Stock) 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 B Preferred Stock
were entitled immediately prior to such event shall be adjusted
by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend
or distribution on the Series B Preferred Stock as provided in
paragraph (a) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable
in shares of Common Stock).
Section 3. Voting Rights. The holders of shares of
Preferred Stock shall have th e following voting rights:
(a) Except as provided in paragraph (c) of
this Section 3 and subject to the provision for adjustment
hereinafter set forth, each share of Series B Preferred Stock
shall entitle the holder thereof to 500 votes on all matters
submitted to a vote of the stockholders of the Corporation. In
the event 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 than by payment of a dividend in shares of Common
<PAGE>
Stock) 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 B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein or by
law, the holders of shares of Series B Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein (or as
otherwise required by applicable law), holders of Series B
Preferred Stock shall have no general or special voting rights.
Section 4. Reacquired Shares. Any shares of Series
B 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 to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Certificate
of Amendment of Restated Certificate of Incorporation, in any
other Certificate of Amendment creating a series of Preferred
Stock or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up.
Subject to the prior and superior rights of holders of any shares
of any series of preferred stock ranking prior and superior to
the shares of Series B Preferred Stock with respect to rights
upon liquidation, dissolution or winding up (voluntary or
otherwise), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up, including but not limited
to the Common Stock) to the Series B Preferred Stock unless,
prior thereto the holders of the Series B Preferred Stock shall
have received $100.00 per share (the "Series B Liquidation
Preference"). Following, the full amount of the Series B
Liquidation Preference, the holders of Series B Preferred Stock
and holders of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio for each share of Preferred Stock an amount 500 times
the amount distributed for each share of Common Stock.
<PAGE>
Section 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 500
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
In t he event 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 than by payment of a dividend in shares of Common
Stock) 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 B Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Redemption.
(a) The Corporation shall have the right, at
any time, in its absolute and sole discretion to redeem all but
not less than all of Series B Preferred Stock. The Corporation
shall effect each such redemption by giving notice of its
election to redeem by at least twenty (20) days advance notice,
given by certified or registered mail, to the holder of shares of
Series B Preferred Stock at the address appearing in the
Corporation's register for the Series B Preferred Stock. The
redemption price per share of Series B Preferred Stock shall be
500 shares of Common Stock, subject to the same adjustment as
provided for in Section 3(a) hereof.
(b) The Common Stock shall be paid to the
holder of shares of Series B Preferred Stock redeemed within 30
business days of the delivery of the notice of such redemption to
such holders; provided, however, that the Corporation shall not
be obligated to deliver any portion of such Common Stock unless
either the certificates evidencing the shares of Series B
Preferred Stock redeemed are delivered to the Corporation or its
transfer agent for the Series B Preferred Stock, or the holder
notifies the Corporation or such transfer agent that such
certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation and such transfer
agent to indemnify the Corporation and such transfer agent from
any loss incurred by it in connection with such certificates.
<PAGE>
Section 8. Ranking. The Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation by its Chief Executive
Officer and attested by its Secretary as of the 24th day of
February, 1998.
/s/ Peter J. Ratican
Name: Peter J. Ratican
Title: Chief Executive Officer
Attest:
/s/ Alan D. Bloom
Name: Alan D. Bloom
Title: Secretary
<PAGE>
Exhibit B
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________________Rights
CUSIP No. _______
NOT EXERCISABLE AFTER FEBRUARY 23, 2008 OR EARLIER IF REDEEMED BY
THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Maxicare Health Plans, 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 February 24, 1998 (the "Rights Agreement"), between
Maxicare Health Plans, Inc., a Delaware corporation (the
"Corporation"), and American Stock Transfer & Trust Company, a
New York corporation (the "Rights Agent"), to purchase from the
Corporation at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on February 23, 2008, unless the Rights evidenced
hereby shall have been previously redeemed by the Corporation, at
the principal office or offices of the Rights Agent designated
for such purpose, or at the office of its successor as Rights
Agent, one five-hundredth of a fully paid non-assessable share of
Series B Preferred Stock, $0.01 par value per share (the
"Preferred Shares"), of the Corporation, at a purchase price of
$45.00 per one five-hundredth of 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 five-hundredths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
February 24 1998, based on the Preferred Shares as constituted at
such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced
by this Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person,
Affiliate or Associate who becomes a transferee after the
<PAGE>
Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of
any such Acquiring Person, Affiliate or Associate who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number of one five-hundredths of a Preferred Share or
other securities which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the
Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Corporation and the holders of
the Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal
executive offices of the Corporation and the principal office or
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate may be redeemed by the
Corporation at a redemption price of $.01 per Right (subject to
adjustment as provided in the Rights Agreement) payable in cash.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are one five-hundredths or integral multiples of
one five-hundredths of a Preferred Share, which may, at the
<PAGE>
election of the Corporation, be evidenced by depository
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
Corporation 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 Corporation 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
other distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Corporation and its corporate seal. Dated as of ____________
__, ____.
[SEAL]
Attest: MAXICARE HEALTH PLANS, INC.
By By
Name: Alan D. Bloom Name: Peter J. Ratican
Title: Secretary Title: Chief Executive
Officer
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By ______________________________
Authorized Signatory
Name:
Title:
<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 Corporation,
with full power of substitution.
Dated: _______________ __, ____
_____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of the
Medallion Signature Guarantee Program.
- ----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or
transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due
inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement).
_____________________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate
to purchase the Preferred Shares, Common Shares or other
securities issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares, Common 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: ________________ __, ____
__________________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued.
Signature Guaranteed:
Signatures must be guaranteed by a member of the
Medallion Signature Guarantee Program.
- ----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after due inquiry and to the best knowledge of
the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was
an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
_____________________________________
Signature
- ----------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment and
Election to Purchase and certificates 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 Corporation 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 such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not
be honored.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS AGREEMENT
On February 24, 1998, the Board of Directors of Maxicare
Health Plans, Inc. (the "Corporation") declared a dividend
distribution of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.01 per
share (the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record on March 16, 1998 (the
"Record Date"), and with respect to Common Shares issued
thereafter, until the Distribution Date (as defined below) and,
in certain circumstances, with respect to Common Shares issued
after the Distribution Date. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered
holder to purchase from the Corporation one five-hundredth of a
share of Series B Preferred Stock, $0.01 par value (the
"Preferred Shares"), of the Corporation at a price of $45.00 per
one five-hundredth 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")
between the Corporation and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent"), dated as of
February 24, 1998.
Initially, the Rights will be attached to all
certificates representing Common Shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
separate from the Common Shares upon the earliest to occur of (i)
the date of a public announcement that, without the prior consent
of a majority of the Disinterested Directors (as defined below),
a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the
Board may determine) following the commencement or announcement
of an intention to make a tender or exchange offer, the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person". The
date that a person or group announces publicly that it has become
an Acquiring Person is the "Shares Acquisition Date". Any current
holder that has previously advised the Corporation that it holds
in excess of 15% of the Common Shares has been "grandfathered"
with respect to its current position, including an allowance for
certain small incremental additions thereto.
<PAGE>
"Disinterested Directors" are "Continuing Directors" who
are not officers or employees of the Corporation and who are not
Acquiring Persons or their affiliates, associates or
representatives of any of them, or any person who was directly or
indirectly proposed or nominated as a director of the Corporation
by an Acquiring Person or certain related parties and "Continuing
Directors" are the members of the Board of Directors as of
February 24, 1998 or persons recommended to succeed a Continuing
Director by a majority of Continuing Directors.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender or transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights Agreement being attached
thereto, 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
to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on February 23,
2008, unless earlier redeemed by the Corporation as described
below.
In the event that any person becomes an Acquiring Person
(except pursuant to a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms which a
majority of the Disinterested Directors determines to be adequate
and in the best interests of the Corporation and its
stockholders, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive
upon exercise Common Shares or one five-hundredth of a share of
Preferred Shares (or, in certain circumstances, other securities
of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the exercise price of the
Right. Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
<PAGE>
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation consolidates with, or
merges into, an Acquiring Person, or an affiliate or associate
thereof, or any person or entity in which such Acquiring Person,
affiliate or associate has an interest or which is acting in
concert with such Acquiring Person, affiliate or associate (an
"Interested Stockholder"), or any other entity (if all holders of
Common Shares are not treated alike in such transaction), (ii) an
Interested Stockholder or any other entity (if all holders of
Common Shares are not treated alike in such transaction)
consolidates with, or merges into the Corporation (other than, in
the case of either transaction described in (i) and (ii) above,
and certain reorganization transactions), or (iii) the
Corporation sells or otherwise transfers (in one transaction or a
series of transactions) 50% or more of the assets or earning
power of the Corporation to an Interested Stockholder or to any
other entity (if all holders of Common Shares are not treated
alike in such transaction), proper provision shall be made so
that each holder of a Right (except Rights which previously have
been voided as set forth below) shall thereafter have the right
(the "Flip-Over Right") to receive, upon exercise, common shares
of the acquiring or surviving company (or, in the event there is
more than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power transferred)
having a value equal to two times the exercise price of the
Right.
The Purchase Price payable, and the number of Preferred
Shares, Common Shares or other securities issuable, upon exercise
of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the Purchase Price
payable are also subject to adjustment in the 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.
<PAGE>
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable, except at the election of the Corporation
for Common Shares. Each Preferred Share will be entitled to a
dividend per share of 500 times the dividend declared per Common
Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled (after the payment of any liquidation
preference on any other series of preferred stock) to $100 per
share, plus the holders of the Preferred Shares and the holders
of the Common Shares will share the remaining assets in the ratio
of 500 to 1 (as adjusted) for each Preferred Share and Common
Share so held, respectively. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive
500 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
one five-hundredths or integral multiples of one five-hundredths
of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depository receipts) and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise or if the Preferred Shares are not traded,
the market price of the Common Shares on such date.
At any time after a person becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or
more of the Common Shares, the Board of Directors of the Company
(with the approval of a majority of the Disinterested Directors)
may exchange the Rights (other than the Rights owned by the
Acquiring Person or its affiliates and associates, which shall
have become void) at an exchange ratio of one Common Share per
Right (subject to adjustment). The Board of Directors can
substitute one five-hundredths of a Preferred Share for some or
all of the Common Shares per Right.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors (with the
approval of a majority of the Disinterested Directors).
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
<PAGE>
combination transaction or series of transactions involving the
Corporation in which all holders of Common Shares are treated
alike but not involving an Acquiring Person or its affiliates or
associates and provided further that this redemption right shall
not exist for 180 days following the Shares Acquisition Date
under certain circumstances.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Corporation (with the
approval of a majority of the Disinterested Directors) prior to
the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten
or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to Form 8-A,
dated March 13, 1998. A copy of the Rights Agreement is
available free of charge from the Corporation. This summary
description of the Rights and the Preferred Shares does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement and the Exhibits thereto, which
are hereby incorporated herein by reference.
MAXICARE HEALTH PLANS, INC. ADOPTS
SHAREHOLDER RIGHTS PLAN
LOS ANGELES, FEBRUARY 24, 1998 --- MAXICARE HEALTH
PLANS, INC. (NASDAQ-NMS:MAXI) ("Company") announced today that
its Board of Directors has adopted a Shareholder Rights Plan
designed to protect shareholders from various hostile or abusive
takeover tactics, including attempts to acquire control of the
Company at an inadequate price.
This plan is designed to assure that in the event of an
unsolicited or hostile attempt to acquire the Company, the Board
of Directors would have the opportunity to consider and implement
a course of action which would best maximize shareholder value.
Under the plan, each shareholder will receive a dividend of one
Right for each share of the Company's outstanding common stock.
Each Right shall entitle the holder thereof to purchase 1/500th
of a share of the Company's Series B Preferred Stock ("B
Preferred"). Each 1/500th B Preferred share shall be entitled to
one vote in all matters being voted on by the holders of common
stock and shall also be entitled to a liquidation preference of
$0.20.
The Rights will initially be attached to the Company's
common stock and will not be exercisable until a shareholder or
group of shareholders acting together, without the approval of
the Board of Directors, announce their intent to become a 15% or
more owner in the Company's common stock. At that time,
certificates evidencing the Rights shall be distributed to
shareholders, the Rights shall detach from the common stock and
shall become exercisable. When such buyer acquires 15% or more
of the Company's common stock, all Rights holders, except the
non-approved buyer, will be entitled to acquire an amount of B
Preferred at a rate equivalent to 50% of the then market price of
the common stock. In addition, if the Company is acquired in a
non-approved merger, after such an acquisition, all Rights
holders, except the aforementioned 15% or more buyer, will be
entitled to acquire stock in the surviving corporation at a 50%
discount in accordance with the plan.
<PAGE>
The Rights shall attach to all shares held by the
Company's shareholders of record as of the close of business on
March 16, 1998. Shares of common stock that are newly-issued
after that date will also carry Rights until the Rights become
detached from the common stock. The Rights will expire on
February 23, 2008. The Company may redeem the Rights for $.01
each at any time before a non-approved buyer acquires 15% or more
of the Company's common stock. Any current holder that has
previously advised the Company of owning an amount in excess of
15% of the Company's common stock as of the date hereof has been
"grandfathered" with respect to their current position, including
allowance for certain small incremental additions thereto. The
dividend of the Rights to shareholders is not taxable to
shareholders.
Peter J. Ratican, Chief Executive Officer and Chairman
of the Board of Directors of the Company stated "in light of the
recent fluctuations of the Company's common stock and the ongoing
trend of consolidation in the HMO industry, the Board of
Directors unanimously believes that the implementation of the
plan will protect the Company and its shareholders against
abusive takeover tactics. The plan is not aimed at preventing a
takeover, but encourages a potential buyer to negotiate directly
with the Board of Directors prior to attempting a takeover.
Further, it would ensure that the Board of Directors has the
opportunity to appropriately consider any proposed takeover and
seek to implement a response which would be in the best interests
of the Company and its shareholders".
Details of the plan are included with a letter which
will be mailed to the Company's shareholders of record.
Shareholders may also obtain a copy of the plan which will be
filed with the Securities and Exchange Commission on Form 8-K.
Maxicare operates in seven states, serving members in California,
Indiana, Illinois, Louisiana, North Carolina, South Carolina and
Wisconsin.
This press release contains forward-looking information. The
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements may be significantly impacted
by certain risks and uncertainties including the number of
beneficiaries and the reimbursement rates paid by the State of
California during the term of the MMC Medi-Cal contracts referred
to above.
