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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SAFEGUARD HEALTH ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-3797580
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
505 NORTH EUCLID STREET, P.O. BOX 3210, ANAHIEM, CALIFORNIA 92803-3210
----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On March 22, 1996 ("RIGHTS DIVIDEND DECLARATION DATE"), the Company's Board
of Directors declared a dividend of one right (a "RIGHT") to purchase
fractions of the shares of its Series A Junior Participating Preferred Stock,
par value $.01 per share having the rights, preferences, privileges and
restrictions described below ("PREFERRED STOCK"), and, under certain
circumstances, other securities, for each outstanding share of the Company's
common stock, par value $.01 per share ("COMMON STOCK"), to be distributed to
stockholders of record at the close of business on April 12, 1996 ("RECORD
DATE"). The description and terms of the Rights are set forth in a Rights
Agreement (the "RIGHTS AGREEMENT"), dated as of March 22, 1996 between the
Company and American Stock Transfer and Trust Company, as Rights Agent.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by
reference to the Rights Agreement which has been filed as an exhibit to the
Company's Registration Statement on Form 8-A filed with the Securities and
Exchange Commission.
A. ISSUANCE OF THE RIGHTS
Each share of Common Stock outstanding at the close of business on the Record
Date will receive one Right. In addition, prior to the earliest of the
Distribution Date, a Section 13 Event or the Expiration Date (as each is
hereinafter defined), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the
Distribution Date and prior to the expiration or redemption of the Rights,
the Company will issue one Right (as such number may be adjusted pursuant to
the provisions of the Rights Agreement) for each share of Common Stock issued
pursuant to the exercise of stock options or under employee plans or upon the
exercise, conversion or exchange of securities issued by the Company prior to
the Distribution Date. A "SECTION 13 EVENT" shall mean any event in which
(i) the Company merges or consolidates with another and the Company is not
the surviving corporation; (ii) the Company merges or consolidates with
another, the Company is the surviving corporation, and all or part of the
Company's common stock is exchanged for other securities, cash or property;
or (iii) the Company sells or transfers more than 50% of its assets or
earning power. The "EXPIRATION DATE" shall mean the earliest of (i) March
21, 2006; (ii) the date of redemption of the Rights; (iii) the date the Board
orders an exchange of Rights; or (iv) the date of consummation of a tender
offer approved as fair to and in the best interests of the Company and its
stockholders, and adequately priced with each stockholder receiving the same
consideration per share in the same manner.
B. COMMON STOCK CERTIFICATES REPRESENT THE RIGHTS PRIOR TO THE DISTRIBUTION DATE
Prior to the Distribution Date (as hereinafter defined), no separate Rights
certificates will be issued. Instead, the Rights will be evidenced by the
certificates for the Common Stock to which they are attached and will be
transferred with and only with such Common Stock certificates. The surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. New Common Stock certificates issued after
the Record Date will contain a legend incorporating the Rights Agreement by
reference.
C. DISTRIBUTION DATE; ISSUANCE OF RIGHTS CERTIFICATES
The Rights will separate from the Common Stock and become exercisable and a
Distribution Date will occur ("DISTRIBUTION DATE") upon the earlier of ten
days after (i) public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (an "ACQUIRING PERSON") or such earlier
date as a majority of the Directors shall become aware of the existence of an
Acquiring Person ("STOCK ACQUISITION DATE"); or (ii) the commencement of a
tender or exchange offer by any person or group, if upon consummation
thereof, such person or group of affiliated or associated persons would be
the beneficial owner of 15% or more of the shares of Common Stock then
outstanding. As soon as practicable after the Distribution Date, Rights
certificates will be mailed to holders of record of the Common
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Stock as of the close of business on the Distribution Date and, thereafter,
the separate Rights certificates alone will represent the Rights.
D. EXERCISE OF THE RIGHTS
RIGHTS INITIALLY NOT EXERCISABLE. Prior to the Distribution Date, the Rights
are not exercisable.
EXERCISE OF THE RIGHTS TO PURCHASE PREFERRED STOCK OF THE COMPANY. At any
time after the Distribution Date but prior to the earlier of the expiration
or redemption of the Rights, each Right may be exercised at the stated
purchase of $75.00 (subject to adjustment, the "EXERCISE PRICE") for one
one-thousandth of a share of the Preferred Stock, provided, however, that
upon the occurrence of any of the events described below the Rights may no
longer be exercised for the Preferred Stock and may only be exercised for
certain other securities described below.
EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF THE COMPANY. In the event
that at any time following the Rights Dividend Declaration Date, a person,
alone or with affiliates, becomes the beneficial owner of 15% or more of the
then outstanding shares of the Company's Common Stock (except pursuant to an
offer for all outstanding shares of Common Stock which is determined by both
(i) the Board of Directors acting by Special Vote, and (ii) a majority of the
Directors who are not associated with an Acquiring Person ("CONTINUING
DIRECTORS") and who are also not employees of the Company, to be fair to and
otherwise in the best interests of the Company and its stockholders (a
"PERMITTED OFFER"), then each holder of a Right will thereafter have the
right to exercise the Right for Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the Exercise Price of the Right. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the
Company may substitute for all or any portion of the Common Stock that would
be issuable upon exercise of the Rights, cash, assets, or other securities
having the same aggregate value as such Common Stock. The Rights are
exercisable as described in this paragraph only after the Company's right of
redemption (as described below) has expired. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph
(a "SECTION 11(a)(ii) EVENT"), all Rights that are, or under certain
circumstances specified in the Rights Agreement were, beneficially owned by
an Acquiring Person will be null and void. A "SPECIAL VOTE" of the Board of
Directors is approval by both a majority of the Continuing Directors and a
majority of the entire Board, including the Continuing Directors.
EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF AN ACQUIRING COMPANY. In
the event that, at any time following the Stock Acquisition Date, (i) the
Company is merged or consolidated with another company in a business
combination transaction in which the Company is not the surviving corporation
or in which the Company is the surviving corporation and all or part of the
Common Stock of the Company is exchanged for stock of any other person, cash
or any other property (other than a merger which follows an offer described
in the preceding paragraph), or (ii) more than 50% of the assets or earning
power of the Company and its subsidiaries (taken as a whole) is sold or
transferred, then each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right to exercise
the Right for common stock of the acquiring company having a value equal to
two times the Exercise Price of the Right. (An event described in this
paragraph is a "SECTION 13 EVENT.")
ADJUSTMENT OF NUMBER OF RIGHTS, PURCHASE PRICE AND NUMBER OF UNITS OF
PREFERRED STOCK. The Exercise Price payable and/or the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to proportionate 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 Stock, (ii) in the event
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). If at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date the
Company declares a stock dividend on, subdivides or combines the outstanding
shares of Common Stock, the number of Rights associated with each share of
Common Stock shall be proportionately adjusted.
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E. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
The Company is generally not required to issue fractional Rights, fractions
of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth share), or fractions of shares of Common
Stock and, in lieu thereof, an adjustment in cash will be made on the market
price of the Rights, Preferred Stock, or Common Stock, respectively.
F. REDEMPTION OF THE RIGHTS
In general, the Company may redeem all (but not less than all) of the Rights
at a price of $0.01 per Right (subject to adjustment to reflect stock splits,
stock dividends, or similar transactions), at any time until the earlier of
the tenth day following the Stock Acquisition Date or March 21, 2006
(provided that any redemption after any person becomes an Acquiring Person
may be effected only by the Board of Directors acting by Special Vote). This
redemption period may be extended by the Board of Directors by amending the
Rights Agreement as described below prior to the time when the Rights become
nonredeemable. The redemption price may be paid in cash, shares of Common
Stock, or any other consideration the Board of Directors deems appropriate.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price.
G. EXCHANGE OF THE RIGHTS
At any time after a Section 11(a)(ii) Event or a Section 13 Event and before
any person or group acquires 50% or more of the outstanding Common Stock, the
Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange some or all of the outstanding and exercisable Rights for
Common Stock at a one-to-one exchange ratio (appropriately adjusted to
reflect stock splits, dividends or similar transactions). Rights may not be
exercised after the Board orders their exchange. If there is not sufficient
authorized unissued Common Stock to fund an exchange, the Board, acting by
Special Vote, may fund the exchange through other consideration, including
issuance of debt and/or equity. In addition, at any time before any person
or group becomes an Acquiring Person, the Board, acting by Special Vote, may
exchange some or all of the Rights for rights of substantially equivalent
value.
H. AMENDMENTS
Other than those provisions relating to the redemption price or the final
expiration date of the Rights, any of the provisions of the Rights Agreement
may be supplemented or amended by the Board of Directors of the Company prior
to the Distribution Date, without approval of the Rights holders, whether or
not a supplement or amendment is adverse to the Rights holders. After the
Distribution Date, any provisions of the Rights Agreement (other than those
provisions relating to the redemption price or the final expiration date of
the Rights) may be amended by the Board of Directors acting by Special Vote
in order to (i) cure any ambiguous, defective or inconsistent provision, (ii)
shorten or lengthen any time period hereunder, or (iii) otherwise change a
provision which the Board of Directors acting by Special Vote may deem
necessary or desirable and which does not materially and adversely affect the
interests of holders of Rights (other than any Acquiring Person); provided,
the Rights Agreement may not be amended to (A) make the Rights again
redeemable after the Rights have ceased to be redeemable, or (B) change any
other time period unless such change is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to the holders of
the Rights (other than any Acquiring Person).
I. EXPIRATION
The Rights will expire upon the earliest to occur of the close of business on
March 21, 2006, the exchange or redemption of the Rights by the Company, or
the consummation of a Permitted Offer transaction followed by a merger or
consolidation of the Company with another company in which all stockholders
of the Company receive the same consideration and terms as in the Permitted
Offer.
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J. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
K. TERMS OF THE PREFERRED STOCK
The Company has initially reserved 30,000 shares of Preferred Stock for
issuance upon exercise of the Rights, such number to be subject to adjustment
from time to time in accordance with the Rights Agreement. The Preferred
Stock will be nonredeemable. The dividend, liquidation and voting rights,
and the rights upon consolidation or merger of the Preferred Stock are
designed so that the value of the one one-thousandth interest in a share of
Preferred Stock purchasable with each Right will approximate the value of one
share of Common Stock. Each whole share of Preferred Stock will be entitled
to receive a quarterly preferential dividend of 1,000 times the dividend
declared on the Common Stock. In the event of liquidation, the holders of
the Preferred Stock will be entitled to receive a preferential liquidation
payment of $1,000 per share plus the amount of accrued unpaid dividends
thereon, the holders of the Common Stock will then be entitled to receive a
liquidation payment equal to $1.00 per share (subject to proportionate
adjustment to reflect stock splits, dividends or combinations), and the
holders of the Preferred Stock and Common Stock will then share ratably in
all assets remaining available for distribution to stockholders. Each share
of Preferred Stock will have 1,000 votes (subject to proportionate adjustment
to reflect stock splits, dividends and combinations), and will generally vote
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or other
property, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock (subject to proportionate
adjustment to reflect stock splits, dividends and combinations).
L. ANTI-TAKEOVER EFFECTS
The Rights are designed to protect and maximize the value of stockholders'
interests in the Company in the event of an unsolicited attempt to take
control of the Company in a manner or on terms not approved by the Board of
Directors. Attempts to take control of a company frequently include coercive
tactics to deprive the Board of Directors and stockholders of any real
opportunity to determine the destiny of the Company. The Rights have been
declared by the Board in order to deter such tactics, including a gradual
accumulation in the open market of a 15% or greater position, followed by a
merger or a partial, or two-tier tender offer that does not treat all
stockholders equally. These tactics can unfairly pressure stockholders,
squeeze them out of their investment without giving them any real choice; and
deprive them of the full value of their shares.
The Rights are not intended to prevent a takeover of the Company and will not
do so. The rights may be redeemed by the Company as described above, and
accordingly, the Rights should not interfere with any merger or business
combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with its
business plans. The issuance of the Rights themselves has no dilutive
effect, will not affect reported earnings per share, should not be taxable to
the Company or to its stockholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors
believes that the Rights represent a sound and reasonable means of addressing
the complex issues of corporate policy created by the current takeover
environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group
that attempts to acquire the Company on terms or in a manner not approved by
the Company's Board of Directors, except pursuant to an offer conditioned
upon the negation, purchase or redemption of the Rights.
5
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ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of March 22, 1996, between Safeguard Health
Enterprises, Inc. and American Stock Transfer and Trust Company, as Rights
Agent, which includes as Exhibit B thereto the Form of Rights Certificate to
be distributed to holders of Rights after the Distribution Date (as the term
is defined in the Rights Agreement).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Date: March 28, 1996 SAFEGUARD HEALTH ENTERPRISES, INC.
By: STEVEN J. BAILEYS, D.D.S.
-----------------------------------------
STEVEN J. BAILEYS, D.D.S., Chairman,
President and Chief Executive Officer
By: RONALD I. BRENDZEL
-----------------------------------------
RONALD I. BRENDZEL, Senior Vice President
and Secretary
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[SAFEGUARD HEALTH ENTERPRISES LETTERHEAD]
April 12, 1996
Dear Stockholder:
On March 22, 1996, your Board of Directors adopted a Stockholder Rights Plan
in a effort to assure that all Safeguard Health Enterprises, Inc.,
("Safeguard") stockholders receive maximum value in the event of an attempted
or actual takeover of the Company. We have enclosed a summary description of
the plan which we urge you to read carefully.
Adoption of rights plans is a common practice among public companies in the
United States. Rights plans are intended to provide the Board of Directors
(the "Board") with additional time and bargaining power to protect
stockholder interests in the event of an unsolicited takeover bid. The
Safeguard rights plan will not prevent a takeover of the Company on terms
that are in the best interests of all stockholders. However, the rights plan
should encourage a potential acquiror to negotiate with the Board prior to
attempting a takeover. This should position the Board to protect your
interests.
The Safeguard Stockholder Rights Plan involves distribution of one "Right"
for each share of common stock outstanding on April 12, 1996. Thereafter,
each newly issued share of common stock will also include a Right. Initially,
there will be no separate Rights certificates. Instead, each Right will
simply be a part of the share of common stock to which it is attached. It
will be represented by the common stock certificate, it will trade
automatically with the common stock, and it will not be separable or
exercisable unless certain events occur.
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Stockholder Rights Plan
April 12, 1996
Page Two
If a person or group acquires 15% or more of Safeguard's outstanding common
stock, each Right, NOT OWNED BY THE ACQUIROR OR ITS AFFILIATES, will entitle
its holder to pay the Company $75 (the exercise price per Right) and receive
newly issued shares of common stock worth $150. For example, if the stock
were trading at $15.00 per share, each Right would entitle its holder to
purchase 10 shares for $75, or $7.50 per share. This ability of stockholders
other than the acquiror to purchase additional shares at a 50% discount from
market would cause an unapproved takeover to be much more expensive to an
acquiror. As a result, a potential acquiror would have a strong incentive not
to pursue a hostile strategy, and instead to negotiate with your Board to
redeem the Rights or approve the transaction so that the Rights do not become
exercisable.
Adoption of the Stockholders Rights Plan does not affect the financial
strength of the Company and will not interfere with our business strategy and
plans. The issuance of the Rights alone will not affect earnings per share or
change the way in which you can presently trade the Company's shares.
The attached summary describes the Rights in more detail.
Thank you for your continued support of Safeguard Health Enterprises, Inc.
For the Board of Directors
STEVEN J. BAILEYS, D.D.S
Chairman
SJB:acm
Enclosures
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[SAFEGUARD HEALTH ENTERPRISES LETTERHEAD]
NEWS RELEASE
- ------------
CONTACT: Ronald I. Brendzel
-------- Senior Vice President
(714) 778-1005
FOR IMMEDIATE RELEASE
- ---------------------
March 22, 1996
SAFEGUARD HEALTH ENTERPRISES, INC., ADOPTS STOCKHOLDER RIGHTS PLAN
- ------------------------------------------------------------------
ANAHEIM, CALIFORNIA--Safeguard Health Enterprises, Inc.
(NASDAQ-NMS:SFGD), announced today that its Board of Directors has approved
the adoption a Stockholder Rights Plan. The Rights Plan, which is similar to
rights plans adopted by a number of public companies, provides for the
distribution to Safeguard's stockholders of one preferred stock purchase
"Right" for each outstanding share of Safeguard common stock. The Rights have
an exercise price of $75 per Right, subject to subsequent adjustment.
Initially, the Rights will trade with Safeguard's common stock, and will not
be exercisable until the occurrence of certain takeover-related events.
Generally, the Rights Plan provides that if a person or group acquires
15% or more of Safeguard's common stock, the holders of the Rights, other
than the acquiring person or group, would, under certain circumstances, have
the right to purchase additional shares of Safeguard's common stock, or, in
some cases, of the acquiring entity, at a discount to the then market price.
If Safeguard is thereafter merged into another entity, or if 50% or more of
Safeguard's consolidated assets or earning power are sold, then the Right
will entitle its holder, other than the acquiring person or group, to buy
common shares of the acquiring entity having a market value equal to two
times the exercise price of the Right.
The Rights will be distributed to holders of Safeguard common stock of
record on April 12, 1996, as a dividend, and will expire, unless earlier
redeemed, on March 21, 2006. Further details relating to the Rights Plan will
be provided to Safeguard stockholders in a forthcoming letter.
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"The Stockholder Rights Plan will not prevent a purchase of the Company
on terms that are fair and in the best interest of all stockholders, and is
not intended to prevent such an event," said Steven J. Baileys, D.D.S.,
Chairman and Chief Executive Officer. "We believe that the Rights Plan will
assure our stockholders that the Company's Board of Directors will have an
adequate opportunity to consider and evaluate all unsolicited proposals for
the Company, including coercive or hostile offers, that might undervalue
stockholder interests. While the adoption of the Rights Plan is not in
response to any takeover attempt, and while there are no current takeover
proposals that have been directed at Safeguard, we are generally aware of the
many rumors in the market, the rapid consolidation occurring in the health care
industry, and the takeovers occurring in other industries. Our Board of
Directors believes that the actions taken are prudent under the
circumstances," Dr. Baileys said.
Safeguard is a multifaceted specialized managed health care company
providing benefits to over 761,000 members enrolled in various managed care
programs, indemnity products, vision products, dental and vision
point-of-service products, and life insurance products. The Company also owns
34 dental offices located throughout California and provides administrative
services and preferred provider organization services. Safeguard contracts
with over 2,700 client organizations and provides benefits through over
13,000 contracting providers.
* * * * * * * * *
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SAFEGUARD HEALTH ENTERPRISES, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
______________
RIGHTS AGREEMENT
DATED AS OF MARCH 22, 1996
<PAGE>
TABLE OF CONTENTS
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 5
3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . 5
4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . 6
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . 7
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost & Stolen Rights Certificates . . . . . . . 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . 8
8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . .10
9. Reservation and Availability of Capital Stock . . . . . . . . . . . . . .10
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . .12
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . . . .19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. . .19
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . .22
15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . .24
17. Rights Certificate Holder Not Deemed a Shareholder. . . . . . . . . . . .24
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . .25
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . .25
20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . .25
21. Change of Rights Agents . . . . . . . . . . . . . . . . . . . . . . . . .27
22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . .28
23. Redemption and Termination. . . . . . . . . . . . . . . . . . . . . . . .28
24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . .31
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . .32
28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
29. Determination and Actions by the Board of Directors, etc. . . . . . . . .33
30. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . . . .33
31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
34. Descriptive Headings; References. . . . . . . . . . . . . . . . . . . . .34
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 22, 1996 ("AGREEMENT"), between
Safeguard Health Enterprises, Inc., a Delaware corporation ("COMPANY") and
American Stock Transfer & Trust Company ("RIGHTS AGENT").
WHEREAS, on March 22, 1996 ("RIGHTS DIVIDEND DECLARATION DATE"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Company outstanding at the close of business on April 12,
1996 ("RECORD DATE"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of SECTION
11(p) hereof) for each share of Common Stock of the Company issued from the
Record Date (whether originally issued or delivered from the Company's
treasury) until the earliest of the Distribution Date or a Section 13 Event
or the Expiration Date (each as hereinafter defined), each Right initially
representing the right to purchase one one-thousandth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights,
preferences, privileges and restrictions set forth in the form of Certificate
of Designation, Preferences and Rights attached hereto as EXHIBIT A, upon the
terms and subject to the conditions hereinafter set forth ("RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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 the Board of Directors of the Company, shall become, after the date
hereof, the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding, but shall not include an Exempt Person or any Person or
entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan, or a Person who or which, together with its
Affiliates and Associates, shall become the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding solely as a result of a
reduction in the number of shares of Common Stock outstanding due to a
repurchase of Common Stock by the Company, unless such Person shall
thereafter purchase or otherwise become the Beneficial Owner of additional
shares of Common Stock. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be an "Acquiring Person" for any purposes of
this Agreement.
(b) "ACT" shall mean the Securities Act of 1933.
(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.
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(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, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant
to SECTION 3(a) or SECTION 22 (the "ORIGINAL RIGHTS") or pursuant to SECTION
11(i) in connection with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing;
PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such security if
such agreement arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso to subparagraph (ii) of this paragraph (d)) or disposing of
any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this
paragraph (d) shall cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such person's participation in good faith in a
firm commitment underwriting until the expiration of forty days after the
date of such acquisition.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
California time on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., California time on the next succeeding
Business Day.
(g) "COMMON STOCK" shall mean the common stock, $0.01 par value, of
the Company, except that "Common Stock" when used with reference to any
Person other
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than the Company shall mean the capital stock (or units of beneficial
interest which represent the right to participate in profits, losses,
deductions and credits) of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct
the management, of such Person.
(h) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
SECTION 11(a)(iii).
(i) "CONTINUING DIRECTOR" shall mean (i) any member of the Board of
Directors of the Company, while a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate,
and who was a member of the Board prior to the date of this Agreement, or
(ii) any Person who subsequently becomes a member of the Board, while a
member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if such Person's nomination for
election or election to the Board is recommended or approved by a majority of
the Continuing Directors.
(j) "CURRENT MARKET PRICE" shall have the meaning set forth in
SECTION 11(d)(i).
(k) "CURRENT VALUE" shall have the meaning set forth in SECTION
11(a)(iii).
(l) "DISTRIBUTION DATE" shall have the meaning set forth in SECTION
3(a).
(m) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth in
SECTION 11(b).
(n) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(o) "EXEMPT PERSON" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company or
any Subsidiary of the Company, or any person or entity organized, appointed,
or established by the Company or any Subsidiary of the Company, for or
pursuant to the terms of any such plan.
(p) "EXPIRATION DATE" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided
in SECTION 23, (iii) the time at which the Board of Directors orders the
exchange of Rights as provided in SECTION 24, or (iv) the consummation of a
transaction contemplated by SECTION 13(d).
(q) "FINAL EXPIRATION DATE" shall mean the close of business on
March 21, 2006.
(r) "PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company or partnership or other entity.
(s) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company and, to the
extent that there is not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to
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permit the full exercise of the Rights, any other series of Preferred Stock,
$.01 par value, of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
(t) "PRINCIPAL PARTY" shall have the meaning set forth in SECTION
13(b).
(u) "PURCHASE PRICE" shall have the meaning set forth in SECTION 4(a).
(v) "RECORD DATE" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(w) "REDEMPTION PRICE" shall have the meaning set forth in SECTION
23(a).
(x) "RIGHTS" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(y) "RIGHTS CERTIFICATES" shall have the meaning set forth in SECTION
3(a).
(z) "RIGHTS DIVIDEND DECLARATION DATE" shall-have the meaning set
forth in the WHEREAS clause at the beginning of this Agreement.
(aa) "SECTION 11(a)(ii) EVENT" shall mean any event described in
SECTION 11(a)(ii).
(bb) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set forth
in SECTION 11(a)(iii).
(cc) "SECTION 13 EVENT" shall mean any event described in clause (x),
(y) or (z) of SECTION 13(a).
(dd) "SPECIAL VOTE:" An action of the Company's Board of Directors by
"Special Vote" means an action that is taken (and can only be taken) at a
time when there are two or more Continuing Directors, and that is approved by
both (i) a majority of the Continuing Directors, and (ii) a majority of the
entire Board of Directors, including the Continuing Directors.
(ee) "SPREAD" shall have the meaning set forth in SECTION 11(a)(iii).
(ff) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
such or such earlier date as a majority of the directors shall become aware
of the existence of an Acquiring Person; PROVIDED THAT, if such person is
thereafter determined not to have become an Acquiring Person within the
meaning of SECTION 1(a), then no Stock Acquisition Date shall be deemed to
have occurred.
(gg) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect at least a majority of the
directors of such corporation (or
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other persons performing similar functions) is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(hh) "SUBSTITUTION PERIOD" shall have the meaning set forth in SECTION
11(a)(iii).
(ii) "TRADING DAY" shall have the meaning set forth in SECTION
11(d)(i).
(jj) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
SECTION 13 Event.
Any determination required by the definitions contained in this SECTION
1 shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with SECTION 3,
shall prior to the Distribution Date also be the holders of the Common Stock)
in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth day after the date
that a tender or exchange offer by any Person (other than an Exempt Person)
is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person together with its Affiliates and
Associates, would be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding (irrespective of whether any shares are
actually purchased pursuant to any such offer) (each of the time periods in
(i) and (ii) being subject to extension as provided in SECTION 27 and the
earliest of (i) and (ii) being herein referred to as the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this SECTION 3) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) each Right will be
transferable only in connection with the transfer of the underlying share of
Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send to each record holder
of the Common Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of EXHIBIT B hereto (the
"RIGHTS CERTIFICATES"), evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to SECTION 11(p), at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with SECTION 14(a)) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights.
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As of and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to purchase Preferred Stock,
containing substantially the information set forth in the form attached
hereto as EXHIBIT C, to each record holder of the Common Stock as of the
close of business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such shares of Common
Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earliest of the Stock
Acquisition Date, a Section 13 Event or the Expiration Date. Certificates
representing such shares of Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) shall also be
deemed to be certificates for Rights, and shall bear the following legend:
"This certificate also represents Rights that entitle the holder hereof
to certain rights as set forth in a Rights Agreement between the Corporation
and American Stock Transfer & Trust Company, as Rights Agent, dated as of
March 22, 1996 ("Rights Agreement"), the terms, conditions and limitations of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
beneficially owned by, any Person who is, was or becomes an Acquiring Person
or any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person or
by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates
shall, until the Distribution Date, be evidenced by such certificates alone
and registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of an election to purchase
and of assignment and of certificates to be printed on the reverse thereof)
when, as and if issued, shall each be substantially in the form set forth in
EXHIBIT B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the
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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 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, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the
holders thereof to purchase such number of one one-thousandths of a share of
Preferred Stock as shall be set forth therein at the price set forth therein
(such exercise price per one one-thousandth of a share, 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) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to SECTION 3(a) or SECTION 22 that represents
Rights beneficially owned by any Person known to be: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of SECTION 7(e), and any Rights
Certificate issued pursuant to SECTION 6 or SECTION 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred
to in this sentence, shall contain (to the extent feasible) the following
legend, modified as applicable to apply to such Person:
"The Rights represented by this Rights 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 Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 7(e) of such Agreement."
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any other officer of
the Company designated by the Chairman or President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Rights Certificate shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
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(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books
for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced on its face by each
of the Rights Certificates and the certificate number and the date of each of
the Rights Certificates.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 4(b), SECTION 7(e) and
SECTION 14, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled 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 Rights Certificate or
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights 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 Company
shall reasonably request. Thereupon the Rights Agent shall, subject to
SECTION 4(b), SECTION 7(e) and SECTION 14, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to SECTION 7(e), 23(b) and 24(b), the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein including, without limitation, the restrictions
on exercisability set forth in SECTION 9(C), SECTION 11(a)(iii) and SECTION
23(a)), in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
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purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-thousandths of a share of Preferred
Stock (or other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or prior to the
Expiration Date.
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$75.00, and shall be subject to adjustment from time to time as provided in
SECTIONS 11 and 13(a) and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price per one one-thousandth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to SECTION 20(k), thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths of a share of
Preferred Stock to be purchased and the Company hereby authorizes its
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depository agent) and the Company will direct the depository agent to
comply with such request, (ii) requisition from the Company an amount of
cash, if any, to be paid in lieu of fractional shares in accordance with
SECTION 14, (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 Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash,
if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to SECTION 11(a)(iii)) may be made by bank draft, certified
bank check or money order payable to the order of the Company. In the event
that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
SECTION 11(a), the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of
SECTION 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a
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transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate of Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) by or for the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect 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
Company shall use all reasonable efforts to insure that the provisions of
this SECTION 7(e) and SECTION 4(b) are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
any of their respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence 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 Rights
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 Company shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All Rights
Certificates surrendered for the purpose of exercises, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and, or other securities) that, as provided in this
Agreement including SECTION 11(a)(iii), will be sufficient to permit the
exercise in full of all outstanding Rights, PROVIDED, HOWEVER, that the
Company shall not be required to reserve and keep available shares of
Preferred Stock, Common Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments
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set forth in SECTION 11(a)(ii), SECTION 11(a)(iii) or SECTION 13 unless, and
only to the extent that, the Rights become exercisable pursuant to such
adjustments.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
(c) If necessary to permit the offer and issuance of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of Rights, the
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with SECTION 11(a)(iii), or as
soon as is required by law following the Distribution Date, as the case may
be, 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) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this SECTION
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement (if required) has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-thousandths of a share
of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject
to payment of the Purchase Price), be duly and validly authorized and issued
and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in respect of a name other than that of,
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the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number
of one one-thousandths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
10. PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock 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 such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby and
such certificate shall be dated as of the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the Preferred Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate, as such,
shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
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.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this SECTION 11(a) and SECTION
7(e), 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 Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment
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under both this 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) Subject to SECTION 23(a) and SECTION 24, in the event any Person
(other than an Exempt Person), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, unless the event causing the 15% threshold to be crossed is an
acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price and on
terms determined by the Board of Directors of the Company acting by Special
Vote and by at least a majority of the Continuing Directors who are not
officers of the Company, after receiving advice from one or more investment
banking firms, to be (a) at a price which is fair to shareholders of the
Company (taking into account all factors which such members of the Board deem
relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests of the
Company and its shareholders, then, proper provision shall be made so that
each holder of a Right (except as provided below and in SECTION 7(e)) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of one one-thousandths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such occurrence, shall
thereafter be referred to as the "PURCHASE PRICE" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to SECTION 11(d)) per share of Common Stock on the date of such
occurrence (such number of shares is herein called the "ADJUSTMENT SHARES");
provided that the Purchase Price and the number of Adjustment Shares shall be
further adjusted as provided in this Agreement to reflect any events
occurring after the date of such occurrence.
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this SECTION 11(a) and the Rights
shall become so exercisable, to the extent permitted by applicable law and
any agreements in effect on the date hereof to which the Company is a party,
the Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "CURRENT VALUE")
over (2) the Purchase Price (such excess, the "SPREAD"), and (B) with respect
to each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity securities
of the Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors of the Company has deemed to
have the same value as shares of Common Stock (such shares of preferred
stock, "COMMON STOCK EQUIVALENTS")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of
a nationally recognized investment banking firm selected by the Board of
Directors of the Company; PROVIDED, HOWEVER, if the Company shall not have
made
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adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of redemption
pursuant to SECTION 23(a) expires (the later of (x) and (y) being referred to
herein as the "SECTION 11(a)(ii) TRIGGER DATE"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent
that the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to SECTION 7(e), that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. For purposes of this
SECTION 11(a)(iii), the value of the Common Stock shall be the Current Market
Price (as determined pursuant to SECTION 11(d)) per share of the Common Stock
on the Section 11(a)(ii) Trigger Date and the value of any "COMMON STOCK
EQUIVALENT" shall be deemed to have the same value as the Common Stock on
such date. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Stock upon the
exercise of Rights pursuant to this SECTION 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences
as the shares of Preferred Stock ("EQUIVALENT PREFERRED STOCK")) or
securities convertible into Preferred Stock or Equivalent Preferred Stock at
a price per share of Preferred Stock or per share of Equivalent Preferred
Stock (or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price (as determined pursuant to SECTION 11(d)) per share of Preferred Stock
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 shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock (and/or
Equivalent Preferred Stock so to be offered and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date, plus
the number of additional shares of Preferred Stock and/or Equivalent
Preferred Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith
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by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other then Preferred Stock) or
subscription rights or warrants (excluding those referred to in SECTION
11(b)), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current
Market Price (as determined pursuant to SECTION 11(d)) per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall be such Current Market Price (as determined
pursuant to SECTION 11(d)) per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record dated is fixed, and in the
event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to SECTION 11(a)(iii), the "CURRENT MARKET PRICE"
per share of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date and for purposes of computations made pursuant to SECTION
11(a)(iii), the "Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the then ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set
forth above, 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 Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
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<PAGE>
respect to securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock 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 Common Stock selected by the
Board of Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such
date as determined in good faith by the Board of Directors of the Company
shall be used. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share
shall mean the fair value per share as determined in good faith by the board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the Current Market
Price per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of this SECTION 11(d)
(other than the last sentence thereof). If the Current Market Price per
share of Preferred Stock cannot be determined in the manner provided above or
if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this SECTION 11(d), the Current Market Price per
share of Preferred Stock shall be conclusively deemed to be an amount equal
to 1,000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"Current Market Price" per share of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of one one-thousandth of a share of
Preferred Stock shall be equal to the Current Market Price of one share of
Preferred Stock divided by 1,000.
(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 one percent (1%) in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this SECTION 11 shall
be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-millionth of a share of Preferred Stock,
as the case may be. Notwithstanding the first sentence of this SECTION
11(e), an 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 adjustments, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to SECTION
11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive
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any shares of capital stock other than Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof 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 Stock contained in SECTION 11, and the
provisions of SECTIONS 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths
of a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in SECTION 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in SECTIONS 11(B) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-thousandths) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock 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-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this SECTION 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to SECTION 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of
the holders of record of Rights Certificates on the record date specified in
the public announcement.
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(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-thousandths of a share and the number of one one-thousandths of a share
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one one-thousandths
of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the number of one one-thousandths of a share of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and
to the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the Current Market Price, (iii)
issuance wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this SECTION 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such stockholders.
(n) The Company 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 Company in a transaction which complies with SECTION
11(o)), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with SECTION 11(O)), 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 Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which
complies with SECTION 11(o)), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such
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consolidation, merger, sale or transfer, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of SECTION
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by SECTION 23, 24 or 27, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding,
or issued or delivered thereafter but prior to the Distribution date, shall
be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 and SECTION 13, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with SECTION 25. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained. Any adjustment to be
made pursuant to SECTIONS 11 and 13 shall be effective as of the date of the
event giving rise to such adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with SECTION 11(o)), and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with SECTION 11(o)) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving corporation
of such consolidation or merger, and, in connection with such consolidation
or merger, all or
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part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company 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 Company and
its Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with SECTION 11(o)), then, and in each such case, proper
provisions shall be made so that: (i) each holder of a Right, except as
provided in SECTION 7(e), shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued,
fully paid, non-assessable and freely tradable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the occurrence
of a Section 11(a)(ii) Event by the Purchase Price in effect immediately
prior to such Section 11(a)(ii) Event, and (2) dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "PURCHASE PRICE" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to SECTION 11(d)(i))
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event (or the fair market value on such date
of other securities or property of the Principal Party, as provided for
herein); PROVIDED that the Purchase Price and the number of shares of Common
Stock of such Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in this Agreement to reflect any events
occurring after the date of the first occurrence of a 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
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being specifically intended
that the provisions of SECTION 11 shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) 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 its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; PROVIDED, HOWEVER, that upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of
a Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had such
Rights Holder, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of
SECTION 11(a)(ii) shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
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(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of SECTION 13(a): (A) the Person
that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer whose issued
and outstanding Common Stock has the greatest aggregate market value
or (B) if no securities are so issued, (x) the Person that is the other
party to such merger or consolidation and survives said merger or
consolidation, or, if there is more than one such Person, the Person
whose issued and outstanding Common Stock has the greatest aggregate
market value or (y) if the Person that is the other party to the merger
or consolidation does not survive the merger or consolidation, the
Person that does survive the merger or consolidation (including the
Company if it survives); 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 pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;
PROVIDED, HOWEVER, that in any such case, (l) if the Common Stock of such
Person is not at such time and has 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
Stock of which is and has been so registered, "Principal Party" shall refer
to such other Person; and (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks 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 issued and outstanding Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock 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 Company 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 will:
(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 Expiration Date and similarly comply
with applicable state securities laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which comply in
all respects
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with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal Party
shall become listed on a national securities exchange, to list (or continue
the listing of) the Rights and the securities purchasable upon exercise of
the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights
to be reported by NASDAQ or such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive rights
in respect of the shares of Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.
The provisions of this SECTION 13 shall similarly apply to successive
mergers or consolidations or sales or transfers. In the event that a Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(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 shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock which complies with the provisions of SECTION 11(a)(ii) hereof
(or a wholly owned Subsidiary of any such Person or Persons), (ii) the price
per share of Common Stock offered in such transaction is not less than the
price per share of Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such tender offer or exchange offer,
and (iii) the form of consideration being offered to the remaining holders of
shares of Common Stock pursuant to such transaction is the same as the form
of consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this SECTION 13(d), all
Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution date as provided in SECTION 11(p), or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights 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 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 of
the Rights 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
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are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock). In lieu of fractional shares
of Preferred Stock that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company may pay to the registered holders of
Rights 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 one-thousandth of a share of Preferred Stock. For purposes of this
SECTION 14(b), the Current Market Value of one one-thousandth of a share of
Preferred Stock shall be one one-thousandth of the closing price of a share
of Preferred Stock (as determined pursuant to SECTION 11(d)(ii)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights 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 (1) share of Common Stock. For purposes
of this SECTION 14(c), the Current Market Value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined
pursuant to SECTION 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this SECTION 14.
15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent
pursuant to SECTION 18, are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and shall be
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entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder
of any Person subject to this Agreement.
16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agents) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e), shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; PROVIDED, HOWEVER, the
Company must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purposes the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in SECTION 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
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18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder as set forth in a
separately executed written fee agreement. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; PROVIDED, HOWEVER,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of SECTION 21. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of
the Rights 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 Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of
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which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the 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 any Acquiring Person and the
determination of "Current Market Price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President, any Vice President, Chief Financial Officer, Treasurer, any
Assistant Treasurer, Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this 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 Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any adjustment required under the
provisions of SECTION 11 or SECTION 13 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 Rights Certificates after receipt of the
certificate described in SECTION 12 setting forth any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
or Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificates or as to whether any shares of Common Stock or Preferred Stock
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board or the President of the Company or any other officer of
the Company designated
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to the Rights Agent in writing by the Chairman of the Board or President of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(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 or any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; PROVIDED, HOWEVER, reasonable care
was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agents 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 Rights 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 either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the incumbent Rights Agent or any registered
holder of any Rights 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
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Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any other 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 and which has at the
time of its appointment as Rights Agent a combined capital and surplus deemed
by the Company's Board of Directors to be reasonable under the circumstances.
After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights 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 Agents
as the case may be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made
in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to shares of Common Stock 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
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth
day following the Record Date), subject to extension as provided in SECTION
27 or (ii) the close of business on the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $0.01
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price
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being hereinafter referred to as the "REDEMPTION PRICE"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the occurrence of an event described in SECTION 11(A)(II)
until such time as the Company's right of redemption hereunder has expired.
The Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the "Current Market Price," as defined in SECTION
11(d)(i), of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. Such redemption
of the Rights by the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole
discretion may establish; PROVIDED, HOWEVER, that any redemption of Rights
occurring as of or after the time a Person becomes an Acquiring Person may be
effected, and the method of payment of the redemption price and conditions to
redemption may be determined, only by the Company's Board of Directors acting
by Special Vote.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, 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, without any interest thereon.
Promptly after the action of the Board of Directors ordering the redemption
of the Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such notice
to all such holders at each holder's last address as it appears 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 Stock. 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. The
failure to give notice required by this SECTION 23(b) or any defect therein
shall not affect the legality or validity of the action taken by the Company.
24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, at any time after the occurrence of a Triggering Event,
the Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of SECTION 7(e)) for Common Stock at an exchange ratio of one
share of Common Stock 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 "RATIO OF
EXCHANGE"). Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person (other than
an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors 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 shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Ratio of
Exchange. The Company shall give public notice of any such exchange;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company shall mail a
notice of any such exchange to
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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 Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of SECTION 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with SECTION 24(a), the Company shall either take such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights or alternatively, at the option of the Board of
Directors acting by Special Vote, with respect to each Right (i) pay cash in
an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Stock in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current
Value, in lieu of issuing Common Stock in exchange for each such Right, where
the value of such securities shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors acting by Special
Vote, or (iii) deliver any combination of cash, property, Common Stock and/or
other securities having a value equal to the Current Value in exchange for
each Right. For purposes of this SECTION 24(c) only, the "CURRENT VALUE"
shall mean the product of the current per share market price of Common Stock
(determined pursuant to SECTION 11(d) on the date of the occurrence of the
event described above in subparagraph (a)) multiplied by the number of shares
of Common Stock for which the Right otherwise would be exchangeable if there
were sufficient shares available. To the extent that the Company determines
that some action need be taken pursuant to clauses (i), (ii), or (iii) of
this SECTION 24(c), the Board of Directors acting by Special Vote may
temporarily suspend the exercisability of the Rights for a period of up to
sixty (60) days following the date on which the event described in SECTION
24(a) shall have occurred, in order to seek any authorization of additional
Common Stock and/or to determine the appropriate form of distribution to be
made pursuant to the above provision and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended.
(d) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates that evidence fractional Common Stock.
In lieu of such fractional Common Stock, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Common Stock would otherwise be issuable, an amount in cash equal
to the same fraction of the current per share market value of a whole Common
Stock (as determined pursuant to the second sentence of SECTION 11(d)).
(e) The Company may, at the option of the Board of Directors acting
by Special Vote, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors acting by Special Vote, based upon the advice of
one or more nationally recognized investment banking firms.
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(f) Immediately upon the action of the Board of Directors acting by
Special Vote ordering the exchange of any Rights pursuant to subsection (e)
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 rights in
exchange therefore as has been determined by the Board of Directors in
accordance with subsection (e) above. The Company shall give public notice
of any such exchange; PROVIDED, HOWEVER, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company shall 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 transfer agent for the Common Stock of the Company. 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 Rights will be effected.
25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
SECTION 11(o)), 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
transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
SECTION 11(o)), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
SECTION 26, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred
Stock, 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 ten (10)
days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier. The failure to
give notice required by this SECTION 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) In case any of the events set forth in SECTION 11(a)(ii) shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 26, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event
to holders of Rights under SECTION 11(a)(ii), and (ii) all references in the
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preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Rights Agent) as follows:
Safeguard Health Enterprises, Inc.
505 North Euclid Street
P.O. Box 3210
Anaheim, California 92803-3210
Attention: President
Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Reorganization Department
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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 Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date and
subject to the penultimate sentence of this SECTION 27, the Board of
Directors of the Company may, in its sole and absolute discretion and the
Rights Agent shall, if the Board of Directors so directs, supplement or amend
any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock, whether or not such
supplement or amendment is adverse to any holders of Rights. From and after
the Distribution Date, and subject to the penultimate sentence of this
SECTION 27, the Board of Directors acting by Special Vote may, and the Rights
Agent shall, if the Board of Directors acting by Special Vote so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions hereunder, (iii) shorten or lengthen
any time period hereunder, or (iv) otherwise change or supplement the
provisions hereunder in any manner which the Board of Directors acting by
Special Vote may deem necessary or desirable and which shall not materially
and adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of any such
Person); provided, this Agreement may not be supplemented or amended after
the Distribution Date to (A) make the Rights again redeemable after the
Rights have ceased to be redeemable, or (B) change any other time period
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unless such change is for the purpose of protecting, enhancing or clarifying
the rights of, and/or the benefits to the holders of Rights (other than any
Acquiring Person and its Associates or Affiliates). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
SECTION 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price or
the Final Expiration Date. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
28. SUCCESSORS. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
29. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock 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. The Board of Directors of the
Company (acting by Special Vote where specifically provided for herein) shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors
of the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including, but not limited to, a determination to redeem or
not redeem the Rights, or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject any member of the
Board of Directors to any liability to the holders of the Rights or to any
other Person.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term,
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provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
(acting by Special Vote) determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in SECTION 23,
if lapsed, shall be reinstated and shall not expire until the close of
business on the tenth Business Day following the date of such determination
by the Board of Directors of the Company.
32. GOVERNING LAW. This Agreement, each Right and each Rights
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
made and to be performed entirely within such State.
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.
34. DESCRIPTIVE HEADINGS; REFERENCES. 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. References herein to Sections and Exhibits shall, unless
otherwise specified, be to the referenced section or exhibit hereof or hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SAFEGUARD HEALTH ENTERPRISES, INC.
By: STEVEN J. BAILEY, D.D.S.
-----------------------------------
Steven J.Baileys, D.D.S.
Chairman, President and Chief Executive
Officer
By: RONALD I. BRENDZEL
-----------------------------------
Ronald I. Brendzel
Senior Vice President, Chief Financial
Officer and Secretary
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: HERBERT J. LEMMER
-----------------------------------
Herbert J. Lemmer
Senior Vice President and General
Counsel
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EXHIBIT A
[FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS]
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
SAFEGUARD HEALTH ENTERPRISES, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
We, Steven J. Baileys, Chairman, President, and Chief Executive
Officer, and Ronald I. Brendzel, Senior Vice President, Chief Financial
Officer and Secretary, of Safeguard Health Enterprises, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, do hereby
certify:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, said Board of Directors
on March 22, 1996 adopted the following resolution creating a series of
30,000 shares of Preferred Stock designated as Series A Participating
Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board
of Directors does hereby provide for the issue of a series of Preferred
Stock, $.01 par value, of the Corporation, to be designated "Series A Junior
Participating Preferred Stock" (hereinafter referred to as the "Series A
Preferred Stock"), initially consisting of 30,000 shares, and to the extent
that the designations, powers, preferences and relative and other special
rights and qualifications, limitations and restrictions of the Series A
Preferred Stock are not stated and expressed in the Certificate of
Incorporation, does hereby fix and herein state and express such
designations, powers, preferences, and relative and other special rights and
qualifications, limitations and restrictions thereof as follows (all terms
used herein which are defined in the Certificate of Incorporation shall be
deemed to have the meanings provided therein):
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 30,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Junior Participating Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Corporation
convertible into Series A Junior Participating Preferred Stock.
<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 A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 15th day of February,
May, August and November in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock, par value $.01 per share, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time after March
22, 1996 ("Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above concurrently with
any declaration of a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
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Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each case the number of votes per share to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A 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, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of
a share of Series A Participating Preferred Stock unless concurrently
therewith it shall declare a dividend on the Series A Participating Preferred
Stock as required by Section 2 hereof.
(B) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 have been
declared but not paid, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distribution on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
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<PAGE>
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the
respective series or classes.
(C) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under the foregoing
provisions of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment ("Series A Liquidation Preference"). Following the
payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share ("Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
1,000 (as appropriately adjusted as set forth in subparagraph 6(C) below to
reflect such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock,
respectively, holders of Series A Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of remaining
assets to be distributed in the ratio of the Adjustment Number to one (1)
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
4
<PAGE>
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. 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 A 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 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. RANKING. The Series A Preferred Stock shall rank junior to
all other series of the Corporation's preferred stock, if any, as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of a majority or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share, which shall entitle the holder, in proportion to
such holder's fractional
5
<PAGE>
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series
A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate as
of the 22nd day of March, 1996.
------------------------------------
Steven J. Baileys, D.D.S.
Chairman, President and
Chief Executive Officer
------------------------------------
Ronald I. Brendzel
Senior Vice President, Chief
Financial Officer and Secretary
<PAGE>
EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R______________ ________________Rights
NOT EXERCISABLE AFTER MARCH 21, 2006 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS 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 RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.*]
RIGHTS CERTIFICATE
SAFEGUARD HEALTH ENTERPRISES, 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 March 22, 1996 ("Rights Agreement"),
between Safeguard Health Enterprises, Inc., a Delaware corporation
("Company"), and American Stock Transfer & Trust Company, a New York
corporation ("Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (California time) on March 21, 2006 at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-thousandth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock ("Preferred Stock") of the Company, at a
purchase price of $75.00 per one one-thousandth of a share ("Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The
Purchase Price may be paid by bank draft, certified bank check or money order
payable to the order of the Company.
The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of ______________, based on the Preferred Stock as
constituted at such date.
- -------------------------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, and shall replace the
preceding sentence.
<PAGE>
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 Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate an Acquiring of Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person, (or of any such
Associate or Affiliate), or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, 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
and kind of shares of Preferred Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights
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).
The Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
Rights, limitations of Rights, and obligations, duties and immunities of the
Rights Agent, the Company and the holders of the Rights 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 office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate amount of securities as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be (i) redeemed by the Company at its option at a
redemption price of $0.01 per Right or (ii) exchanged by the Company in whole
or part for Common Shares, substantially equivalent rights, or other
consideration as determined by the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, 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 Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares
of Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or, to receive notice of meeting or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive
2
<PAGE>
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _____________________, ___
(Seal)
SAFEGUARD HEALTH ENTERPRISES, INC.
By:_______________________________
_______________________________
(Printed Name & Title)
ATTEST:
______________________________
______________________________
(Printed Name & Title)
Countersigned:
American Stock Transfer & Trust Company, as Rights Agent
By: __________________________
__________________________
(Printed Name & Title)
<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto ______________________________________________
___________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
__________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company with full power of
substitution.
Dated: ___________________,
______________________________
(Signature)
______________________________
(Printed Name)
Signature Guaranteed:
______________________________
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: ___________________,
______________________________
(Signature)
______________________________
(Printed Name)
Signature Guaranteed:
______________________________
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED IF HOLDER DESIRES TO
EXERCISE RIGHTS REPRESENTED BY THE
RIGHTS CERTIFICATE)
To: SAFEGUARD HEALTH ENTERPRISES, INC.
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Rights Certificate to purchase the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any other Person
which may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered to:
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 Rights
Certificate, a new Rights Certificate for the balance 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)
______________________________
(Printed Name)
Signature Guaranteed:
______________________________
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(l) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of any such Person.
Dated: ___________________,
______________________________
(Signature)
______________________________
(Printed Name)
Signature Guaranteed:
______________________________
<PAGE>
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT C
SAFEGUARD HEALTH ENTERPRISES, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On March 22, 1996 ("Rights Dividend Declaration Date") the Board of Directors
of Safeguard Health Enterprises, Inc., a Delaware corporation ("Company")
declared a dividend of one Right (a "Right") for each outstanding share of
Company Common Stock to be distributed to stockholders of record at the close
of business on April 12, 1996. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, par value $.01 per share ("Preferred
Stock") at a "Purchase Price" of $75.00, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated
as of March 22, 1996 ("Rights Agreement") between the Company and American
Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates
will be distributed.
Until the Distribution Date (as described below), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and
only with such Common Stock certificates, (ii) new Common Stock certificates
issued after April 12, 1996 will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute the transfer
of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 21, 2006, unless earlier redeemed by the
Company as described below.
The Rights will separate from the Common Stock and a Distribution Date will
occur ("Distribution Date") upon the earlier of 10 days (or such longer time
as may be determined by the Company's board, acting with the approval of a
majority of the Continuing Directors as defined below) following (i) a public
announcement (or determination by the Company's board) that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock ("Stock Acquisition Date"), or (ii) the
commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 15% or more of such outstanding shares of
Common Stock.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
<PAGE>
In the event that on or at any time following the Rights Dividend
Declaration Date, a person becomes the beneficial owner of more than 15% of
the then outstanding shares of Common Stock (except pursuant to an offer for
all outstanding shares of Common Stock which the Continuing Directors
determine to be fair to and otherwise in the best interests of the Company
and its stockholders), then each holder of a Right will thereafter have the
right to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the Purchase Price of the Right. Rights are exercisable following
the occurrence of the foregoing only after such time as the Rights are no
longer redeemable by the Company, as set forth below. Notwithstanding any of
the foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
in which the Company is not the surviving corporation or in which the
Company's outstanding Common Stock is exchanged for cash, stock or other
property (other than a merger which follows an offer described in the second
preceding paragraph), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having
a value equal to two times the Purchase Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution, as set forth in
the Rights Agreement. With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at least 1% of
the Purchase Price. No fractional Rights, fractions of shares of Preferred
Stock (other than fractions which are integral multiples of one
one-thousandth of a share), or fractional shares of Common Stock will be
issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Rights, Preferred Stock, or Common Stock, respectively,
on the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right, at any time until ten days following the Stock
Acquisition Date (or such later date as may be determined by the Company's
board, acting with the approval of a majority of the Continuing Directors, as
defined below). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $0.01 redemption price.
The Company may exchange Common Stock or other substantially equivalent
rights or consideration for the Rights, in whole or part, from time to time
as determined by the Company's board, acting with the approval of a majority
of the Continuing Directors, as defined below.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
2
<PAGE>
Other than those provisions relating to the redemption price or the final
expiration date of the Rights, any of the provisions of the Rights Agreement
may be supplemented or amended by the Board of Directors prior to the
Distribution Date, without approval of the Rights holders, whether or not a
supplement or amendment is adverse to the Rights holders. After the
Distribution Date, the provisions of the Rights Agreement (other than the
provisions relating to the redemption price or the final expiration date of
the Rights) may be amended by the Board of Directors, with the approval of a
majority of the Continuing Directors in order to make changes which do not
materially and adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), PROVIDED, however, that the Rights
Agreement may not be amended to (i) make the Rights again redeemable after
the Rights have ceased to be redeemable, or (ii) change any other time period
unless such change is for the benefit of the holders (excluding any
Acquiring Person).
"Continuing Director" means a member of the Board of Directors of the
Company who is not an Acquiring Person or an affiliate or representative of
an Acquiring Person.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated March 28, 1996. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
3
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
SAFEGUARD HEALTH ENTERPRISES, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
We, Steven J. Baileys, Chairman, President, and Chief Executive Officer,
and Ronald I. Brendzel, Senior Vice President, Chief Financial Officer and
Secretary, of Safeguard Health Enterprises, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, do hereby certify:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, said Board of Directors on
March 22, 1996 adopted the following resolution creating a series of 30,000
shares of Preferred Stock designated as Series A Participating Preferred
Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of
Directors does hereby provide for the issue of a series of Preferred Stock,
$.01 par value, of the Corporation, to be designated "Series A Junior
Participating Preferred Stock" (hereinafter referred to as the "Series A
Preferred Stock"), initially consisting of 30,000 shares, and to the extent
that the designations, powers, preferences and relative and other special
rights and qualifications, limitations and restrictions of the Series A
Preferred Stock are not stated and expressed in the Certificate of
Incorporation, does hereby fix and herein state and express such
designations, powers, preferences, and relative and other special rights and
qualifications, limitations and restrictions thereof as follows (all terms
used herein which are defined in the Certificate of Incorporation shall be
deemed to have the meanings provided therein):
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 30,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Junior Participating Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Corporation
convertible into Series A Junior Participating Preferred Stock.
<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 A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 15th day of February,
May, August and November in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock, par value $.01 per share, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time after March
22, 1996 ("Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above concurrently with any
declaration of a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
2
<PAGE>
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each case the number of votes per share to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series A 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, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of
a share of Series A Participating Preferred Stock unless concurrently
therewith it shall declare a dividend on the Series A Participating Preferred
Stock as required by Section 2 hereof.
(B) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 have been
declared but not paid, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distribution on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
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(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series
or classes.
(C) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under the foregoing provisions of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment ("Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Preferred
Stock unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share ("Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference by (ii) 1,000
(as appropriately adjusted as set forth in subparagraph 6(C) below to reflect
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common Stock,
respectively, holders of Series A Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of remaining
assets to be distributed in the ratio of the Adjustment Number to one (1)
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
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(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. 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 A 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 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. RANKING. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's preferred stock, if any, as to the payment
of dividends and the distribution of assets, unless the terms of any such
series shall provide otherwise.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of a majority or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share, which shall entitle the holder, in proportion to such
holder's fractional
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shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate as of
the 22nd day of March, 1996.
/s/ STEVEN J. BAILEYS, D.D.S.
----------------------------------
Steven J. Baileys, D.D.S.
Chairman, President and
Chief Executive Officer
/s/ RONALD I. BRENDZEL
----------------------------------
Ronald I. Brendzel
Senior Vice President, Chief
Financial Officer and Secretary
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