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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
PARACELSUS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
California 95-3565943
(State of incorporation or organization) (IRS Employer
Identification No.)
515 W. Greens Road, Suite 800,
Houston, Texas 77067
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the
Act:
None
(Title of Class)
Exhibit Index is on Page 9
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Item 1. Description of Registrant's Securities to be
Registered.
On August 14, 1996, the Board of Directors of Paracelsus
Healthcare Corporation, a California corporation (the "Company"),
declared a dividend payable August 16, 1996 of one right (a "Right")
for each outstanding share of common stock, no stated value per share
("Common Stock"), of the Company held of record at the close of
business on August 15, 1996 (the "Record Time"), or issued thereafter
and prior to the Separation Time (as hereinafter defined) and
thereafter pursuant to options and convertible securities outstanding
at the Separation Time. The Rights will be issued pursuant to a
Shareholder Protection Rights Agreement, dated as of August 16, 1996
(the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services L.L.C., as Rights Agent (the "Rights Agent").
Each Right entitles its registered holder to purchase from the Company,
after the Separation Time, one one-hundredth of a share of
Participating Preferred Stock, par value $.01 per share ("Participating
Preferred Stock"), for $42.50 (the "Exercise Price"), subject to
adjustment.
The Rights will be evidenced by the Common Stock
certificates until the close of business on the earlier of (either, the
"Separation Time") (i) the tenth business day (or such later date as
the qualified directors of the Board of Directors of the Company may
from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any
Person (as defined in the Rights Agreement) commences a tender or
exchange offer which, if consummated, would result in such Person's
becoming an Acquiring Person, as defined below, and (ii) the tenth day
after the first date (the "Flip-in Date") (or such earlier or later
date as the qualified directors of the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the
Flip-in Date that would otherwise have occurred) of public announcement
by the Company or any Person that such Person has become an Acquiring
Person, other than as a result of a Flip-over Transaction or Event (as
defined below); provided that if the foregoing results in the
Separation Time being prior to the Record Time, the Separation Time
shall be the Record Time; and provided further that if a tender or
exchange offer referred to in clause (i) is cancelled, terminated or
otherwise withdrawn prior to the Separation Time without the purchase
of any shares of stock pursuant thereto, such offer shall be deemed
never to have been made. An Acquiring Person is any Person having
Beneficial Ownership (as defined in the Rights Agreement) of 25% or
more of the Total Voting Power (as defined in the Rights Agreement) of
the Company,
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which term shall not include (i) the Company, any wholly-owned
subsidiary of the Company or any employee stock ownership or other
employee benefit plan of the Company, (ii) any Person who is the
Beneficial Owner of 25% or more of the Total Voting Power of the
Company as of the date of the Rights Agreement or who shall become the
Beneficial Owner of 25% or more of the Total Voting Power of the
Company solely as a result of an acquisition of Voting Securities (as
defined in the Rights Agreement) by the Company, until such time as
such Person acquires any Voting Securities of the Company, other than
through a dividend or stock split or in accordance with the Shareholder
Agreement dated August 16, 1996 between the Company and Park Hospital
GmbH (the "Shareholder Agreement"), and is thereafter the Beneficial
Owner of 25% or more of the Total Voting Power of the Company,
(iii) any Person who becomes an Acquiring Person without any plan or
intent to seek or affect control of the Company if such Person, upon
notice by the Company, promptly divests sufficient securities such that
such 25% or greater Beneficial Ownership ceases, (iv) any Person who
Beneficially Owns Voting Securities consisting solely of (A) shares
acquired pursuant to the grant or exercise of an option granted by the
Company in connection with an agreement to merge with, or acquire, the
Company at a time at which there is no Acquiring Person, (B) shares
owned by such Person and its Affiliates and Associates at the time of
such grant and (C) shares, amounting to less than 1% of the Total
Voting Power of the Company, acquired by Affiliates and Associates of
such Person after the time of such grant or (v) any Person who becomes
the Beneficial Owner of any Voting Securities of the Company solely as
a result of an acquisition of Voting Securities pursuant to the
Shareholder Agreement, for so long as such Person remains bound by and
a party to the Shareholder Agreement, until such time as such Person
becomes the Beneficial Owner (other than by means of a stock dividend,
stock split or an acquisition in accordance with the Shareholder
Agreement) of any Voting Securities of the Company and such Person
thereafter is the Beneficial Owner of 25% or more of the Total Voting
Power of the Company. The Rights Agreement provides that, until the
Separation Time, the Rights will be transferred with and only with the
Common Stock. Common Stock certificates issued after the Record Time
but prior to the Separation Time shall evidence one Right for each
share of Common Stock represented thereby and shall contain a legend
incorporating by reference the terms of the Rights Agreement (as such
may be amended from time to time). Notwithstanding the absence of the
aforementioned legend, certificates evidencing shares of Common Stock
outstanding at the Record Time shall also evidence one Right for each
share of Common Stock evidenced thereby. Promptly following the
Separation Time, separate
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certificates evidencing the Rights ("Rights Certificates") will be
mailed to holders of record of Common Stock at the Separation Time.
The Rights will not be exercisable until the Business Day
(as defined in the Rights Agreement) following the Separation Time.
The Rights will expire on the earliest of (i) the Exchange Time (as
defined below), (ii) the close of business on August 16, 2006,
(iii) the date on which the Rights are redeemed as described below and
(iv) upon the merger of the Company into another corporation pursuant
to an agreement entered into when there is no Acquiring Person (in any
such case, the "Expiration Time").
The Exercise Price and the number of Rights outstanding, or
in certain circumstances the securities purchasable upon exercise of
the Rights, are subject to adjustment from time to time to prevent
dilution in the event of a Common Stock dividend on, or a subdivision
or a combination into a smaller number of shares of, Common Stock, or
the issuance or distribution of any securities or assets in respect of,
in lieu of or in exchange for Common Stock.
In the event that prior to the Expiration Time a Flip-in
Date occurs, the Company shall take such action as shall be necessary
to ensure and provide, to the extent permitted by applicable law, that
each Right (other than Rights Beneficially Owned by the Acquiring
Person or any affiliate or associate thereof, which Rights shall become
void) shall constitute the right to purchase from the Company, upon the
exercise thereof in accordance with the terms of the Rights Agreement,
that number of shares of Common Stock or Participating Preferred Stock
of the Company having an aggregate Market Price (as defined in the
Rights Agreement), on the date of the public announcement of an
Acquiring Person's becoming such (the "Stock Acquisition Date") that
gave rise to the Flip-in Date, equal to twice the Exercise Price for an
amount in cash equal to the then current Exercise Price. In addition,
the qualified directors of the Board of Directors of the Company may,
at their option, at any time after a Flip-in Date and prior to the time
that an Acquiring Person becomes the Beneficial Owner of more than 50%
of the Total Voting Power of the Company, elect to exchange all (but
not less than all) the then outstanding Rights (other than Rights
Beneficially Owned by the Acquiring Person or any affiliate or
associate thereof, which Rights become void) for shares of 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
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date of the Separation Time (the "Exchange Ratio"). Immediately upon
such action by the Board of Directors (the "Exchange Time"), the right
to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive a number of shares of Common Stock
equal to the Exchange Ratio.
Whenever the Company shall become obligated under the
preceding paragraph to issue shares of Common Stock upon exercise of or
in exchange for Rights, the Company, at its option, may substitute
therefor shares of Participating Preferred Stock, at a ratio of one
one-hundredth of a share of Participating Preferred Stock for each
share of Common Stock so issuable.
In the event that prior to the Expiration Time the Company
enters into, consummates or permits to occur a transaction or series of
transactions after the time an Acquiring Person has become such in
which, directly or indirectly, (i) the Company shall consolidate or
merge or participate in a binding share exchange with any other Person
if, at the time of the consolidation, merger or share exchange or at
the time the Company enters into an agreement with respect to such
consolidation, merger or share exchange, the Acquiring Person controls
the Board of Directors of the Company and any term of or arrangement
concerning the treatment of shares of capital stock in such merger,
consolidation or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of
Voting Securities, (ii) the Company shall sell or otherwise transfer
(or one or more of its subsidiaries shall sell or otherwise transfer)
assets (A) aggregating more than 50% of the assets (measured by either
book value or fair market value) or (B) generating more than 50% of the
operating income or cash flow, of the Company and its subsidiaries
(taken as a whole) to any other Person (other than the Company or one
or more of its wholly owned subsidiaries) or to two or more such
Persons which are affiliated or otherwise acting in concert, if, at the
time of such sale or transfer of assets or at the time the Company (or
any such subsidiary) enters into an agreement with respect to such sale
or transfer, the Acquiring Person controls the Board of Directors of
the Company or (iii) any Acquiring Person shall (A) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, to, from, or with, as the case may be, the Company or any
of its Subsidiaries, over any period of 12 consecutive calendar months,
assets (x) having an aggregate fair market value of more than
$15,000,000 or (y) on terms and conditions less favorable to the
Company than the Company would be able to obtain through arm's-length
negotiations
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with an unaffiliated third party, (B) receive any compensation for
services from the Company or any of its subsidiaries, other than
compensation for full-time employment as a regular employee at rates in
accordance with the Company's (or its subsidiaries') past practices,
(C) receive the benefit, directly or indirectly (except proportionately
as a shareholder), over any period of 12 consecutive calendar months,
of any loans, advances, guarantees, pledges, insurance, reinsurance or
other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its subsidiaries involving an
aggregate principal amount in excess of $5,000,000 or an aggregate cost
or transfer of benefits from the Company or any of its subsidiaries in
excess of $5,000,000 or, in any case, on terms and conditions less
favorable to the Company than the Company would be able to obtain
through arm's-length negotiations with a third party, or (D) increase
by more than 1% its proportionate share of the outstanding shares of
any class of equity securities or securities convertible into any class
of equity securities of the Company or any of its subsidiaries as a
result of any acquisition from the company (with or without
consideration), any reclassification of securities (including any
reverse stock split), or recapitalization, of the Company, or any
merger or consolidation of the Company with any of its subsidiaries or
any other transaction or series of transactions (whether or not with or
into or otherwise involving an Acquiring Person), (a "Flip-over
Transaction or Event"), the Company shall take such action as shall be
necessary to ensure, and shall not enter into, consummate or permit to
occur such Flip-over Transaction or Event until it shall have entered
into a supplemental agreement with the Person engaging in such Flip-
over Transaction or Event or the parent corporation thereof (the "Flip-
over Entity"), for the benefit of the holders of the Rights, providing,
that upon consummation or occurrence of the Flip-over Transaction or
Event (i) each Right shall thereafter constitute the right to purchase
from the Flip-over Entity, upon exercise thereof in accordance with the
terms of the Rights Agreement, that number of shares of common stock of
the Flip-over Entity having an aggregate Market Price on the date of
consummation or occurrence of such Flip-over Transaction or Event equal
to twice the Exercise Price for an amount in cash equal to the then
current Exercise Price and (ii) the Flip-over Entity shall thereafter
be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to the Rights Agreement.
For purposes of the foregoing description, the term "Acquiring Person"
shall include any Acquiring Person and its Affiliates and Associates
counted together as a single Person.
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The qualified directors of the Board of Directors of the
Company may, at their option, at any time prior to the close of
business on the Flip-in Date, redeem all (but not less than all) the
then outstanding Rights at a price of $0.01 per Right) (the "Redemption
Price"), as provided in the Rights Agreement. Immediately upon the
action of the qualified directors of the Board of Directors of the
Company electing to redeem the Rights, without any further action and
without any notice, the right to exercise the Rights will terminate and
each Right will thereafter represent only the right to receive the
Redemption Price in cash for each Right so held.
The holders of Rights will, solely by reason of their
ownership of Rights, have no rights as shareholders of the Company,
including, without limitation, the right to vote or to receive
dividends.
The Rights will not prevent a takeover of the Company.
However, the Rights may cause substantial dilution to a person or group
that acquires 25% or more of the Total Voting Power of the Company
unless the Rights are first redeemed by the Company. Nevertheless, the
Rights should not interfere with a transaction that is in the best
interests of the Company and its shareholders because the Rights can be
redeemed on or prior to the close of business on the Flip-in Date,
before the consummation of such transaction.
As of August 20, 1996 there were 54,733,417 shares of
Common Stock issued (of which all were outstanding and none were held
in treasury) and 10,087,137 shares reserved for issuance pursuant to
employee benefit plans, options, warrants, subscription rights and
convertible securities. As long as the Rights are attached to the
Common Stock, the Company will issue one Right with each new share of
Common Stock so that all such shares will have Rights attached. The
Company's Board of Directors has reserved for issuance upon exercise of
the Rights 1,500,000 shares of Participating Preferred Stock.
The Rights Agreement (which includes as Exhibit A the forms
of Rights Certificate and Election to Exercise and as Exhibit B the
form of Certificate of Designation and Terms of the Participating
Preferred Stock) is attached hereto as an exhibit and is incorporated
herein by reference. The foregoing description of the Rights is quali-
fied in its entirety by reference to the Rights Agreement and such
exhibits thereto.
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Item 2. Exhibits.
Exhibit No. Description
4.1 Rights Agreement, including as Exhibit A the Forms of
Rights Certificate and of Election to Exercise and as
Exhibit B the Form of Certificate of Designation and
Terms of Participating Preferred Stock, included in
Exhibit B to the Rights Agreement.
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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,
thereunto duly authorized.
PARACELSUS HEALTHCARE
CORPORATION
By:/s/ James G. VanDevender
------------------------
James G. VanDevender
Executive Vice President and
Chief Financial Officer
Date: August 21, 1996
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EXHIBIT INDEX
Exhibit No. Description
4.1 Shareholder Protection Rights Agreement, dated
as of August 16, 1996 (the "Rights Agreement"),
between Paracelsus Healthcare Corporation and
ChaseMellon Shareholder Services L.L.C., as
Rights Agent, including as Exhibit A the Forms
of Rights Certificate and of Election to
Exercise and as Exhibit B the Form of
Certificate of Designation and Terms of
Participating Preferred Stock of the Company.
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EXHIBIT 4.1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
August 16, 1996
between
PARACELSUS HEALTHCARE CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
as Rights Agent
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Page
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions . . . . . . . . . . . . . . . 2
Article II
THE RIGHTS
Section 2.1 Summary of Rights . . . . . . . . . . . . . . . . 15
Section 2.2 Legend on Common Stock Certificates . . . . . . . 15
Section 2.3 Exercise of Rights; Separation of
Rights . . . . . . . . . . . . . . . . . . . . . 16
Section 2.4 Adjustments to Exercise Price; Number
of Rights. . . . . . . . . . . . . . . . . . . . 20
Section 2.5 Date on Which Exercise is Effective . . . . . . . 23
Section 2.6 Execution, Authentication, Delivery
and Dating of Rights Certificates. . . . . . . . 23
Section 2.7 Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . 24
Section 2.8 Mutilated, Destroyed, Lost and Stolen
Rights Certificates. . . . . . . . . . . . . . . 26
Section 2.9 Persons Deemed Owners . . . . . . . . . . . . . . 27
Section 2.10 Delivery and Cancellation of
Certificates . . . . . . . . . . . . . . . . . . 28
Section 2.11 Agreement of Rights Holders . . . . . . . . . . . 29
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in . . . . . . . . . . . . . . . . . . . . . 30
Section 3.2 Flip-over . . . . . . . . . . . . . . . . . . . . 35
Article IV
THE RIGHTS AGENT
Section 4.1 General . . . . . . . . . . . . . . . . . . . . . 36
Section 4.2 Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . . . 37
Section 4.3 Duties of Rights Agent . . . . . . . . . . . . . 39
Section 4.4 Change of Rights Agent . . . . . . . . . . . . . 43
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Article V
MISCELLANEOUS
Section 5.1 Redemption . . . . . . . . . . . . . . . . . . . 45
Section 5.2 Expiration . . . . . . . . . . . . . . . . . . . 46
Section 5.3 Issuance of New Rights Certificates . . . . . . . 46
Section 5.4 Supplements and Amendments . . . . . . . . . . . 47
Section 5.5 Fractional Shares . . . . . . . . . . . . . . . . 47
Section 5.6 Rights of Action . . . . . . . . . . . . . . . . 48
Section 5.7 Holder of Rights Not Deemed a
Shareholder . . . . . . . . . . . . . . . . . . 49
Section 5.8 Notice of Proposed Actions . . . . . . . . . . . 49
Section 5.9 Notices . . . . . . . . . . . . . . . . . . . . . 50
Section 5.10 Suspension of Exercisability . . . . . . . . . . 51
Section 5.11 Costs of Enforcement . . . . . . . . . . . . . . 52
Section 5.12 Successors . . . . . . . . . . . . . . . . . . . 52
Section 5.13 Benefits of this Agreement . . . . . . . . . . . 52
Section 5.14 Determination and Actions by the
Qualified Directors or Board of
Directors, Etc. . . . . . . . . . . . . . . . . 52
Section 5.15 Descriptive Headings . . . . . . . . . . . . . . 53
Section 5.16 Governing Law . . . . . . . . . . . . . . . . . 53
Section 5.17 Counterparts . . . . . . . . . . . . . . . . . . 53
Section 5.18 Severability . . . . . . . . . . . . . . . . . . 54
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of
Election to Exercise)
Exhibit B Form of Certificate of
Designation and Terms of
Participating Preferred Stock
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time
to time, this "Agreement"), dated as of August 16, 1996, between
Paracelsus Healthcare Corporation, a California corporation (the
"Company"), and ChaseMellon Shareholder Services L.L.C., a Delaware
limited liability company, as Rights Agent (the "Rights Agent", which
term shall include any successor Rights Agent hereunder).
WITNESSETH:
WHEREAS, the Board of Directors of the Company has
(a) authorized and declared a dividend of one right ("Right") in
respect of each share of Common Stock (as hereinafter defined) held of
record as of the close of business on August 15, 1996 (the
"Record Time") and (b) as provided in Section 2.4, authorized the
issuance of one Right in respect of each share of Common Stock issued
after the Record Time and prior to the Separation Time (as hereinafter
defined) and, to the extent provided in Section 5.3, each share of
Common Stock issued after the Separation Time;
WHEREAS, subject to the terms and conditions hereof, each Right
entitles the holder thereof, after the Separation Time, to purchase
securities of the Company (or, in certain cases, of certain other
entities) pursuant to the terms and subject to the conditions set forth
herein; and
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WHEREAS, the Company desires to appoint the Rights Agent to act
on behalf of the Company, and the Rights Agent is willing so to act, in
connection with the issuance, transfer, exchange and replacement of
Rights Certificates (as hereinafter defined), the exercise of Rights
and other matters referred to herein;
NOW THEREFORE, in consideration of the premises and the
respective agreements set forth herein, the parties hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial
Owner of 25% or more of the Total Voting Power of the Company;
provided, however, that the term "Acquiring Person" shall not include
any Person (i) who is the Beneficial Owner of 25% or more of the Total
Voting Power of the Company on the date of this Agreement or who shall
become the Beneficial Owner of 25% or more of the Total Voting Power of
the Company solely as a result of an acquisition by the Company of
Voting Securities of the Company, until such time hereafter or
thereafter as any of such Persons shall become the Beneficial Owner
(other than by means of a stock dividend or stock split or an
acquisition in accordance with the Shareholder Agreement) of
<PAGE> 3
any Voting Securities of the Company and is thereafter the Beneficial
Owner of 25% or more of the Total Voting Power of the Company, (ii) who
is the Beneficial Owner of 25% or more of the Total Voting Power of the
Company but who acquired Beneficial Ownership of Voting Securities
without any plan or intention to seek or affect control of the Company,
if such Person promptly enters into an irrevocable commitment promptly
to divest, and thereafter promptly divests (without exercising or
retaining any power, including voting, with respect to such shares),
sufficient shares of Voting Securities so that such Person ceases to be
the Beneficial Owner of 25% or more of the Total Voting Power of the
Company, (iii) who Beneficially Owns Voting Securities consisting
solely of one or more of (A) Voting Securities of the Company
Beneficially Owned pursuant to the grant or exercise of an option
granted to such Person (an "Option Holder") by the Company in
connection with an agreement to merge with, or acquire, the Company
entered into prior to a Flip-in Date, (B) Voting Securities of the
Company Beneficially Owned by such Option Holder or its Affiliates or
Associates at the time of grant of such option or (C) shares of Voting
Securities of the Company acquired by Affiliates or Associates of such
Option Holder after the time of such grant which, in the aggregate,
amount to less than 1% of the Total Voting Power of the Company or (iv)
who shall become the Beneficial Owner of any Voting Securities
<PAGE> 4
of the Company solely as a result of an acquisition of Voting
Securities of the Company pursuant to the Shareholder Agreement for so
long as such Person remains bound by and a party to the Shareholder
Agreement, until such time as such Person shall become the Beneficial
Owner (other than by means of a stock dividend, stock split or an
acquisition in accordance with the Shareholder Agreement) of any Voting
Securities of the Company and such Person thereafter is the Beneficial
Owner of 25% or more of the Total Voting Power of the Company. In
addition, the Company, any wholly-owned Subsidiary of the Company and
any employee stock ownership or other employee benefit plan of the
Company or a wholly-owned Subsidiary of the Company shall not be an
Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act
of 1934, as such Rule is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own," any securities as
to which such Person or any of such Person's Affiliates or Associates
is or may be deemed to be the beneficial owner of pursuant to Rule 13d-
3 and 13d-5 under the Securities Exchange Act, as such Rules are in
effect on the date of this Agreement, as well as any securities as to
which such Person or any of such Person's
<PAGE> 5
Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the
passage of time or the occurrence of conditions) pursuant to any
agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the
rights under the Rights Plan), warrants or options, or otherwise;
provided, however, that the Shareholder (as defined in the Shareholder
Agreement) shall not be deemed the "Beneficial Owner" and to have
"Beneficial Ownership" of, and to "Beneficially Own," any voting
securities of Paracelsus by virtue of the Right of First Refusal
Agreement dated the date hereof between the Shareholder and certain
persons or by virtue of the acquisition by the Shareholder of such
Voting Securities pursuant thereto; provided, further, that a Person
shall not be deemed the "Beneficial Owner", or to have "Beneficial
Ownership" of, or to "Beneficially Own", any Voting Security (i) solely
because such Voting Security has been tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered Voting Security is accepted for
payment or exchange or (ii) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or
<PAGE> 6
direct the voting of such Voting Security pursuant to a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Securities Exchange Act of 1934, except if such
power (or the arrangements relating thereto) is then reportable under
Item 6 of Schedule 13D under the Securities Exchange Act of 1934 (or
any similar provision of a comparable or successor report). For
purposes of this Agreement, in determining the percentage of the out-
standing shares of Voting Securities with respect to which a Person is
the Beneficial Owner, all shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in The City of Los Angeles,
California, Houston, Texas, or New York, New York are generally
authorized or obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 p.m.
Houston time on such date or, if such date is not a Business Day, 5:00
p.m. Houston time on the next succeeding Business Day.
"Common Stock" shall mean the shares of Common Stock, no stated
par value per share, of the Company.
<PAGE> 7
"Exchange Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which
a holder may purchase the securities issuable upon exercise of one
whole Right. Until adjustment thereof in accordance with the terms
hereof, the Exercise Price shall equal $42.50.
"Expiration Time" shall mean the earliest of (i) the Exchange
Time, (ii) the Redemption Time, (iii) the close of business on the
tenth anniversary of the Record Time and (iv) immediately prior to the
effective time of a consolidation, merger or share exchange (each, a
"Business Combination") of the Company (x) into another corporation or
(y) with another corporation in which the Company is the surviving
corporation but Voting Securities are converted into cash and/or
securities of another corporation, in either case pursuant to an
agreement entered into prior to a Flip-in Date.
"Flip-in Date" shall mean the tenth business day after any
Stock Acquisition Date or such earlier or later date as a majority of
the Qualified Directors may from time to time fix by resolution adopted
prior to the Flip-in Date that would otherwise have occurred.
"Flip-over Entity," for purposes of Section 3.2, shall mean
(i) in the case of a Flip-over Transaction or
<PAGE> 8
Event described in clause (i) of the definition thereof, the Person
issuing any securities into which Voting Securities are being converted
or exchanged and, if no such securities are being issued, the other
party to such Flip-over Transaction or Event and (ii) in the case of a
Flip-over Transaction or Event referred to in clause (ii) or (iii) of
the definition thereof, the Person receiving the greatest portion of
the assets or earning power being transferred in such Flip-over
Transaction or Event, provided in all cases if such Person is a
subsidiary of a corporation, the parent corporation shall be the Flip-
over Entity.
"Flip-over Stock" shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the
election of directors (or other persons similarly responsible for
direction of the business and affairs) of the Flip-over Entity.
"Flip-over Transaction or Event" shall mean a transaction or
series of transactions after a Flip-in Date in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate
in a share exchange with any other Person if, at the time of the
consolidation, merger or share exchange or at the time the Company
enters into any agreement with respect to any such consolidation,
merger or share exchange, the Acquiring Person Controls the Board of
Directors of the Company and either (A) any term of or arrangement
concerning the treatment of shares of capital
<PAGE> 9
stock in such consolidation, merger or share exchange relating to the
Acquiring Person is not identical to the terms and arrangements
relating to other holders of the Voting Securities or (B) the Person
with whom the transaction or series of transactions occurs is the
Acquiring Person or an Affiliate or Associate of the Acquiring Person,
(ii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer) assets (A) aggregat-
ing more than 50% of the assets (measured by either book value or fair
market value) or (B) generating more than 50% of the operating income
or cash flow, of the Company and its Subsidiaries (taken as a whole) to
any Person (other than the Company or one or more of its wholly owned
Subsidiaries) or to two or more such Persons which are Affiliates or
Associates or otherwise acting in concert, if, at the time of the entry
by the Company (or any such Subsidiary) into an agreement with respect
to such sale or transfer of assets, the Acquiring Person Controls the
Board of Directors of the Company, or (iii) any Acquiring Person shall
(A) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, to, from, or with, as the case may be,
the Company or any of its Subsidiaries, over any period of
12 consecutive calendar months, assets (x) having an aggregate fair
market value of more than $15,000,000 or (y) on terms and conditions
less favorable to the Company
<PAGE> 10
than the Company would be able to obtain through arm's-length
negotiations with an unaffiliated third party, (B) receive any
compensation for services from the Company or any of its Subsidiaries,
other than compensation for full-time employment as a regular employee
at rates in accordance with the Company's (or its Subsidiaries') past
practices, (C) receive the benefit, directly or indirectly (except
proportionately as a shareholder), over any period of 12 consecutive
calendar months, of any loans, advances, guarantees, pledges,
insurance, reinsurance or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of its
Subsidiaries involving an aggregate principal amount in excess of
$5,000,000 or an aggregate cost or transfer of benefits from the
Company or any of its Subsidiaries in excess of $5,000,000 or, in any
case, on terms and conditions less favorable to the Company than the
Company would be able to obtain through arm's-length negotiations with
a third party or (D) increase by more than 1% its proportionate share
of the outstanding shares of any class of equity securities or
securities convertible into any class of equity securities of the
Company or any of its Subsidiaries as a result of any acquisition from
the Company (with or without consideration), any reclassification of
securities (including any reverse stock split), or recapitalization, of
the Company, any merger or consolidation of the Company or any other
transaction or
<PAGE> 11
series of transactions (whether or not with or into or otherwise
involving an Acquiring Person). For purposes of the foregoing
description, the term "Acquiring Person" shall include any Acquiring
Person and its Affiliates and Associates, counted together as a single
Person. An Acquiring Person shall be deemed to Control the Company's
Board of Directors when, following a Flip-in Date, the persons who were
directors of the Company before the Flip-in Date shall cease to
constitute a majority of the Company's Board of Directors.
"Market Price" per share of any securities on any date shall
mean the average of the daily closing prices per share of such
securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day imme-
diately preceding such date; provided, however, that if an event of a
type analogous to any of the events described in Section 2.4 hereof
shall have caused the closing prices used to determine the Market Price
on any Trading Days during such period of 20 Trading Days not to be
fully comparable with the closing price on such date, each such closing
price so used shall be appropriately adjusted in order to make it fully
comparable with the closing price on such date. The closing price per
share of any securities on any date shall be the last reported sale
price, regular way, or, in case no such sale takes place or is quoted
on such date, the average of the closing bid and
<PAGE> 12
asked prices, regular way, for each share of such securities, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange, Inc. or, if the securities are not listed or
admitted to trading on the New York Stock Exchange, Inc., as reported
in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on
which the securities are listed or admitted to trading or, if the
securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securi-
ties Dealers, Inc. Automated Quotation System or such other system then
in use, or, if on any such date the securities are not listed or ad-
mitted to trading on any national securities exchange or quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the secu-
rities selected by a majority of the Qualified Directors; provided,
however, that if on any such date the securities are not listed or ad-
mitted to trading on a national securities exchange or traded in the
over-the-counter market, the closing price per share of such securities
on such date shall mean the fair value per share of securities on such
date as determined in good faith by a majority of the Qualified
Directors, after consultation with a nationally
<PAGE> 13
recognized investment banking firm, and set forth in a certificate
delivered to the Rights Agent.
"Person" shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-5 under the
Securities Exchange Act of 1934, as such Rule is in effect on the date
of this Agreement), corporation or other entity.
"Preferred Stock" shall mean the series of Participating
Preferred Stock, par value $.01 per share, of the Company created by a
Certificate of Designation and Terms in substantially the form set
forth in Exhibit B hereto appropriately completed.
"Qualified Directors" shall mean the directors of the Company
who are not employed by, Affiliated with or nominees or representatives
of any Acquiring Person.
"Redemption Price" shall mean an amount equal to one cent,
$0.01.
"Redemption Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the close of business on the
earlier of (i) the tenth business day (or such later date as a majority
of the Qualified Directors may from time to time fix by resolution
adopted prior to the Separation Time that would otherwise have
occurred) after the date on which any Person commences a tender or
exchange offer which,
<PAGE> 14
if consummated, would result in such Person's becoming an Acquiring
Person and (ii) the Flip-in Date; provided, that if the foregoing
results in the Separation Time being prior to the Record Time, the
Separation Time shall be the Record Time and provided further, that if
any tender or exchange offer referred to in clause (i) of this
paragraph is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any Voting Securities pursuant
thereto, such offer shall be deemed, for purposes of this paragraph,
never to have been made.
"Shareholder Agreement" shall mean the Shareholder Agreement
dated the date hereof between the Company and Park Hospital GmbH.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that an Acquiring Person has
become such.
"Subsidiary" of any specified Person shall mean any corporation
or other entity of which a majority of the voting power of the equity
securities or a majority of the equity interest is Beneficially Owned,
directly or indirectly, by such Person.
"Total Voting Power" shall mean the non-diluted aggregate
number of votes that may be cast by the holders of outstanding Voting
Securities.
"Trading Day," when used with respect to any securities, shall
mean a day on which the New York Stock
<PAGE> 15
Exchange, Inc. is open for the transaction of business or, if such
securities are not listed or admitted to trading on the New York Stock
Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is
open for the transaction of business or, if such securities are not
listed or admitted to trading on any national securities exchange, a
Business Day.
"Voting Securities" shall mean all securities entitled to vote
in the ordinary course in the election of directors or of Persons
serving in a similar governing capacity, including the voting rights
attached to such securities and rights or options to acquire such
securities.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the
Record Time, the Company will mail a letter summarizing the terms of
the Rights to each holder of record of Common Stock as of the Record
Time, at such holder's address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the
Common Stock issued after the Record Time but prior to the Separation
Time shall evidence one Right for each share of Common Stock
represented thereby and
<PAGE> 16
shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:
Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights Agreement,
dated as of August 16, 1996 (as such may be amended from time to
time, the "Rights Agreement"), between Paracelsus Healthcare
Corporation (the "Company") and ChaseMellon Shareholder Services
L.L.C., as Rights Agent, the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be redeemed, may
become exercisable for securities or assets of the Company or of
another entity, may be exchanged for shares of Common Stock or other
securities or assets of the Company, may expire, may become void (if
they are "Beneficially Owned" by an "Acquiring Person" or an
Affiliate or Associate thereof, as such terms are defined in the
Rights Agreement, or by any transferee of any of the foregoing) or
may be evidenced by separate certificates and may no longer be
evidenced by this certificate. The Company will mail or arrange for
the mailing of a copy of the Rights Agreement to the holder of this
certificate without charge after the receipt of a written request
therefor.
Certificates representing shares of Common Stock that are issued and
outstanding at the Record Time shall evidence one Right for each share
of Common Stock evidenced thereby notwithstanding the absence of the
foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject
to Sections 3.1, 5.1 and 5.10 and subject to adjustment as herein set
forth, each Right will entitle the holder thereof, after the Separation
Time and prior to the Expiration Time, to purchase, for the Exercise
Price, one one-hundredth of a share of Preferred Stock.
<PAGE> 17
(b) Until the Separation Time, (i) no Right may be exercised
and (ii) each Right will be evidenced by the certificate for the
associated share of Common Stock (together, in the case of certificates
issued prior to the Record Time, with the letter mailed to the record
holder thereof pursuant to Section 2.1) and will be transferable only
together with, and will be transferred by a transfer (whether with or
without such letter) of, such associated share.
(c) Subject to the terms and conditions hereof, after the
Separation Time and prior to the Expiration Time, the Rights (i) may be
exercised and (ii) may be transferred independent of shares of Common
Stock. Promptly following the Separation Time, the Rights Agent will
mail to each holder of record of Common Stock as of the Separation Time
(other than any Person whose Rights have become void pursuant to
Section 3.1(b)), at such holder's address as shown by the records of
the Company (the Company hereby agreeing to furnish copies of such
records to the Rights Agent for this purpose), (x) a certificate (a
"Rights Certificate") in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by such
holder at the Separation Time and having such marks of identification
or designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not inconsistent
with the
<PAGE> 18
provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any national securities exchange or quotation
system on which the Rights may from time to time be listed or traded,
or to conform to usage, and (y) a disclosure statement describing the
Rights.
(d) Subject to the terms and conditions hereof, Rights may be
exercised on any Business Day after the Separation Time and prior to
the Expiration Time by submitting to the Rights Agent the Rights
Certificate evidencing such Rights with an Election to Exercise (an
"Election to Exercise") substantially in the form attached to the
Rights Certificate duly completed, accompanied by payment in cash, or
by certified or official bank check or money order payable to the order
of the Company, of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any
transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares or depositary receipts
(or both) in a name other than that of the holder of the Rights being
exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and
subject to the terms and conditions
<PAGE> 19
hereof, the Rights Agent will thereupon promptly (i)(A) requisition
from a transfer agent stock certificates evidencing such number of
shares or other securities to be purchased (the Company hereby
irrevocably authorizing its transfer agents to comply with all such
requisitions) and (B) if the Company elects pursuant to Section 5.5 not
to issue certificates representing fractional shares, requisition from
the depositary selected by the Company depositary receipts representing
the fractional shares to be purchased or requisition from the Company
the amount of cash to be paid in lieu of fractional shares in
accordance with Section 5.5 and (ii) after receipt of such certif-
icates, depositary receipts and/or cash, deliver the same to or upon
the order of the registered holder of such Rights Certificate,
registered (in the case of certificates or depositary receipts) in such
name or names as may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than
all the Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised will be
issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) The Company covenants and agrees that it will (i) take
all such action as may be necessary to ensure that all shares delivered
upon exercise of Rights shall, at the
<PAGE> 20
time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized,
executed, issued and delivered and fully paid and nonassessable;
(ii) take all such action as may be necessary to comply with any appli-
cable requirements of the Securities Act of 1933 or the Securities
Exchange Act of 1934, and the rules and regulations thereunder, and any
other applicable law, rule or regulation, in connection with the
issuance of any shares upon exercise of Rights; and (iii) pay when due
and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of any shares issued upon the exercise of
Rights, provided that the Company shall not be required to pay any
transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares in a name other than
that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In
the event the Company shall at any time after the Record Time and prior
to the Separation Time (i) declare or pay a dividend on Common Stock
payable in Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of
shares of Common Stock, (x) the Exercise Price in
<PAGE> 21
effect after such adjustment will be equal to the Exercise Price in
effect immediately prior to such adjustment divided by the number of
shares of Common Stock (the "Expansion Factor") that a holder of one
share of Common Stock immediately prior to such dividend, subdivision
or combination would hold thereafter as a result thereof and (y) each
Right held prior to such adjustment will become that number of Rights
equal to the Expansion Factor, and the adjusted number of Rights will
be deemed to be distributed among the shares of Common Stock with
respect to which the original Rights were associated (if they remain
outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock
will have exactly one Right associated with it. Each adjustment made
pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue any shares of Common Stock
otherwise than in a transaction referred to in the preceding paragraph,
each such share of Common Stock so issued shall automatically have one
new Right associated with it, which Right shall be evidenced by the
certificate representing such share. To the extent provided in Section
5.3, Rights shall be issued by the
<PAGE> 22
Company in respect of shares of Common Stock that are issued or sold by
the Company after the Separation Time.
(b) In the event the Company shall at any time after the
Record Time and prior to the Separation Time issue or distribute any
securities or assets in respect of, in lieu of or in exchange for
Common Stock (other than pursuant to a regular periodic cash dividend
or a dividend paid solely in Common Stock) whether by dividend, in a
reclassification or recapitalization (including any such transaction
involving a merger, consolidation or share exchange), or otherwise, the
Company shall make such adjustments, if any, in the Exercise Price,
number of Rights and/or securities or other property purchasable upon
exercise of Rights as a majority of the Qualified Directors, in their
sole discretion, may deem to be appropriate under the circumstances in
order to adequately protect the interests of the holders of Rights
generally, and the Company and the Rights Agent shall amend this
Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to
this Section 2.4 shall be calculated to the nearest cent. Whenever an
adjustment to the Exercise Price is made pursuant to this Section 2.4,
the Company shall (i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such
adjustment and (ii) promptly file with the Rights Agent
<PAGE> 23
and with each transfer agent for the Common Stock a copy of such
certificate.
(d) Rights Certificates shall represent the securities
purchasable under the terms of this Agreement, including any adjustment
or change in the securities purchasable upon exercise of the Rights,
even though such certificates may continue to express the securities
purchasable at the time of issuance of the initial Rights Certificates.
2.5 Date on Which Exercise is Effective. Each Person in
whose name any certificate for shares is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of
record of the shares represented thereby on the date upon which the
Rights Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price for such Rights (and any applicable taxes
and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such
surrender and payment is a date upon which the stock transfer books of
the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of
the Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates. (a) The Rights Certificates
<PAGE> 24
shall be executed on behalf of the Company by the Chairman or Vice
Chairman of the Board or the President or a Vice President and by the
Chief Financial Officer or an Assistant Treasurer or the Secretary or
any Assistant Secretary. The signature of any of these officers on the
Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
Promptly after the Separation Time, the Company will notify the
Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Company to the Rights Agent for counter-
signature, and, subject to Section 3.1(b), the Rights Agent shall
manually countersign and deliver such Rights Certificates to the
holders of the Rights pursuant to Section 2.3(c) hereof. No Rights
Certificate shall be valid for any purpose unless manually counter-
signed by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.7 Registration, Registration of Transfer and Exchange. (a)
After the Separation Time, the Company will cause to be kept a register
(the "Rights Register") in
<PAGE> 25
which, subject to such reasonable regulations as it may prescribe, the
Company will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Company and registering Rights
and transfers of Rights after the Separation Time as herein provided.
In the event that the Rights Agent shall cease to be the Rights
Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Section 2.7(c) and (d),
the Company will execute, and the Rights Agent will countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or
more new Rights Certificates evidencing the same aggregate number of
Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all
Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Company, and such
Rights shall be entitled to the same benefits under this Agreement as
the
<PAGE> 26
Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company or
the Rights Agent, as the case may be, duly executed by the holder
thereof or such holder's attorney duly authorized in writing. As a
condition to the issuance of any new Rights Certificate under this
Section 2.7, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto.
(d) The Company shall not be required to register the
transfer or exchange of any Rights after such Rights have become void
under Section 3.1(b), been exchanged under Section 3.1(c) or been
redeemed or terminated under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates. (a) If any mutilated Rights Certificate is surrendered
to the Rights Agent prior to the Expiration Time, then, subject to
Sections 3.1(b), 3.1(c) and 5.1, the Company shall execute and the
Rights Agent shall countersign and deliver in exchange therefor a new
Rights Certificate evidencing the same number of Rights as did the
Rights Certificate so surrendered.
<PAGE> 27
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction
of the destruction, loss or theft of any Rights Certificate and
(ii) such security or indemnity as may be required by them to save each
of them and any of their agents harmless, then, subject to Sections
3.1(b), 3.1(c) and 5.1 and in the absence of notice to the Company or
the Rights Agent that such Rights Certificate has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the
Rights Agent shall countersign and deliver, in lieu of any such
destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.8, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this
Section 2.8 in lieu of any destroyed, lost or stolen Rights Certificate
shall evidence an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Rights
Certificate shall be at any time enforceable by anyone, and, subject to
Section 3.1(b)
<PAGE> 28
shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a
Rights Certificate (or, prior to the Separation Time, the associated
Common Stock certificate) for registration of transfer, the Company,
the Rights Agent and any agent of the Company or the Rights Agent may
deem and treat the person in whose name such Rights Certificate (or,
prior to the Separation Time, such Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby for all purposes whatsoever, including the payment of the
Redemption Price and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Rights
shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights
Certificates surrendered upon exercise or for registration of transfer
or exchange shall, if surrendered to any Person other than the Rights
Agent, be delivered to the Rights Agent and, in any case, shall be
promptly cancelled by the Rights Agent. The Company may at any time
deliver to the Rights Agent for cancellation any Rights Certificates
previously countersigned and delivered
<PAGE> 29
hereunder which the Company may have acquired in any manner whatsoever,
and all Rights Certificates so delivered shall be promptly cancelled by
the Rights Agent. No Rights Certificates shall be countersigned in
lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.10, except as expressly permitted by this
Agreement. The Rights Agent shall destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a transfer
of, the associated share of Common Stock;
(b) after the Separation Time, the Rights Certificates will
be transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Stock certificate)
for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the person
in whose name the Rights Certificate (or, prior to the Separation Time,
the associated Common Stock certificate) is registered as
<PAGE> 30
the absolute owner thereof and of the Rights evidenced thereby for all
purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary;
(d) Rights Beneficially Owned by certain Persons will, under
the circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Section 2.4(b) or 5.4 hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration
Time a Flip-in Date shall occur, then, to the extent applicable law
permits Rights owned by certain Persons referred to in Section 3.1(b)
to become void pursuant to the provisions thereof, except as provided
in this Section 3.1, each Right shall constitute the right to purchase
from the Company, upon exercise thereof in accordance with the terms
hereof (but subject to Section 5.10), that number of shares of Common
Stock having an aggregate Market Price on the Stock Acquisition Date
equal to twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event
that on or after such Stock
<PAGE> 31
Acquisition Date an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).
(b) Notwithstanding the foregoing, to the extent permitted by
applicable law, any Rights that are or were Beneficially Owned on or
after the Stock Acquisition Date by an Acquiring Person or an Affiliate
or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or
transfer such Rights under any provision of this Agreement. If any
Rights Certificate is presented for assignment or exercise and the
Person presenting the same will not complete the certification set
forth at the end of the form of assignment or notice of election to
exercise and provide such additional evidence of the identity of the
Beneficial Owner and its Affiliates and Associates (or former Benefi-
cial Owners and their Affiliates and Associates) as the Company shall
reasonably request, then a majority of the Qualified Directors shall be
entitled conclusively to deem the Beneficial Owner thereof to be an
Acquiring Person or an Affiliate or Associate thereof or a transferee
of any of the foregoing and accordingly will, to the extent permitted
by applicable law, deem the Rights evidenced thereby to be void and not
transferable or exercisable.
<PAGE> 32
(c) A majority of the Qualified Directors may, at their
option, at any time after a Flip-in Date and prior to the time that an
Acquiring Person becomes the Beneficial Owner of more than 50% of the
Total Voting Power of the Company, but only to the extent applicable
law permits Rights owned by certain Persons referred to in
Section 3.1(b) to become void pursuant to the provisions thereof, elect
to exchange all (but not less than all) the then outstanding Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 3.1(b)) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted in
order to protect the interests of holders of Rights generally in the
event that after the Separation Time an event of a type analogous to
any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Common Stock (such exchange ratio, as
adjusted from time to time, being hereinafter referred to as the
"Exchange Ratio").
Immediately upon the action of the Qualified Directors electing
to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right
(other than Rights that have become void pursuant to Section 3.1(b))
will thereafter represent only the right to receive a number of shares
of Common Stock equal to the Exchange Ratio.
<PAGE> 33
Promptly after the action of the Qualified Directors electing to
exchange the Rights, the Company shall give notice thereof (specifying
the steps to be taken to receive shares of Common Stock in exchange for
Rights) to the Rights Agent and the holders of the Rights (other than
Rights that have become void pursuant to Section 3.1(b)) outstanding
immediately prior thereto by mailing such notice in accordance with
Section 5.9.
Each Person in whose name any certificate for shares is issued
upon the exchange of Rights pursuant to this Section 3.1(c) or Section
3.1(d) shall for all purposes be deemed to have become the holder of
record of the shares represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of any applicable taxes and
other governmental charges payable by the holder was made; provided,
however, that if the date of such surrender and payment is a date upon
which the stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on
which the stock transfer books of the Company are open.
(d) Whenever the Company shall become obligated under
Section 3.1(a) or (c) to issue shares of Common Stock upon exercise of
or in exchange for Rights, the Company, at
<PAGE> 34
the option of the Qualified Directors by majority vote, may substitute
therefor shares of Preferred Stock, at a ratio of one one-hundredth of
a share of Preferred Stock for each share of Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Common Stock or Preferred
Stock of the Company to permit the exercise or exchange in full of the
Rights in accordance with Section 3.1(a) or (c), and the Qualified
Directors elect not to, or the Company is otherwise unable to, make the
exchange referred to in Section 3.1(c), the Company shall either
(i) call a meeting of shareholders seeking approval to cause sufficient
additional shares to be authorized (provided that if such approval is
not obtained the Company will take the action specified in clause (ii)
of this sentence) or (ii) take such action as shall be necessary to
ensure and provide, to the extent permitted by applicable law and any
agreements or instruments in effect on the Stock Acquisition Date to
which it is a party, that each Right shall thereafter constitute the
right to receive, (x) at the Company's option, either (A) in return for
the Exercise Price, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to twice the Exercise
Price, or (B) without payment of consideration (except as otherwise
required by applicable law), debt or equity securities or other assets
(or a
<PAGE> 35
combination thereof) having a fair value equal to the Exercise Price,
or (y) if the Qualified Directors of the Company elect to exchange the
Rights in accordance with Section 3.1(c), debt or equity securities or
other assets (or a combination thereof) having a fair value equal to
the product of the Market Price of a share of Common Stock on the Flip-
in Date times the Exchange Ratio in effect on the Flip-in Date, where
in any case set forth in (x) or (y) above the fair value of such debt
or equity securities or other assets shall be as determined in good
faith by the Qualified Directors, after consultation with a nationally
recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the
Company shall not enter into any agreement with respect to, consummate
or permit to occur any Flip-over Transaction or Event unless and until
it shall have entered into a supplemental agreement with the Flip-over
Entity, for the benefit of the holders of the Rights, providing that,
upon consummation or occurrence of the Flip-over Transaction or Event
(i) each Right shall thereafter constitute the right to purchase from
the Flip-over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-over Stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the
Exercise Price for an amount in cash equal to the
<PAGE> 36
Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event
that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall
have occurred with respect to the Flip-over Stock) and (ii) the Flip-
over Entity shall thereafter be liable for, and shall assume, by virtue
of such Flip-over Transaction or Event and such supplemental agreement,
all the obligations and duties of the Company pursuant to this
Agreement. The provisions of this Section 3.2 shall apply to
successive Flip-over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be
redeemed pursuant to Section 5.1 hereof in connection therewith, the
Company shall not enter into any agreement with respect to, consummate
or permit to occur any Flip-over Transaction or Event if at the time
thereof there are any rights, warrants or securities outstanding or any
other arrangements, agreements or instruments that would eliminate or
otherwise diminish in any material respect the benefits intended to be
afforded by this Rights Agreement to the holders of Rights upon
consummation of such transaction.
<PAGE> 37
ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted to be
done 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.
(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 certificate for securities purchasable upon exercise of
Rights, Rights Certificate, certificate for other securities of the
Company, instrument of assignment or transfer, power of
<PAGE> 38
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.
4.2 Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execu-
tion or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of
Section 4.4 hereof. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
have not been countersigned, any successor Rights Agent may countersign
such Rights Certificates
<PAGE> 39
either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel will
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
<PAGE> 40
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the persons believed by the Rights Agent to be the Chairman
or Vice Chairman of the Board or the President or a Vice President and
the Chief Financial Officer or an Assistant Treasurer or the Secretary
or any Assistant Secretary and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the certificates for securities purchasable upon exercise of
Rights or the Rights Certificates (except its countersignature thereof)
or be required to verify the same, but all such statements and
<PAGE> 41
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any
certificate for securities purchasable upon exercise of Rights or
Rights Certificate (except its countersignature thereof); nor will it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor
will it be responsible for any change in the exercisability of the
Rights (including the Rights becoming void pursuant to Section 3.1(b)
hereof) or any adjustment required under the provisions of Section 2.4,
3.1 or 3.2 hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights after receipt of the certificate contemplated by Section 2.4
describing any such adjustment); nor will it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any securities purchasable upon exercise of Rights or
any Rights or as to whether any securities purchasable upon exercise of
Rights will, when
<PAGE> 42
issued, be duly and validly authorized, executed, issued and delivered
and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any person believed by the Rights Agent to be the Chief
Executive Officer, the President or any Vice President or the Secretary
or any Assistant Secretary or the Treasurer or any Assistant Treasurer
of the Company, and to apply to such persons for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with
instructions of any such person.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in Common Stock,
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and
<PAGE> 43
freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and
be discharged from its duties under this Agreement upon 90 days' notice
(or such lesser notice as is acceptable to the Company) in writing
mailed to the Company and to each transfer agent of Common Stock by
registered or certified mail, and to the holders of the Rights in
accordance with Section 5.9. The Company may remove the Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent and to each
transfer agent of the Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable
of acting, the Company will appoint a successor to the Rights
<PAGE> 44
Agent. If the Company fails to make such appointment within a period
of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of any Rights (which holder shall, with
such notice, submit such holder's Rights Certificate for inspection by
the Company), then the holder of any Rights may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the
laws of the United States or of any state of the United States, in good
standing, which is authorized under such laws to exercise the powers of
the Rights Agent contemplated by this Agreement and is subject to
supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor
Rights Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the
<PAGE> 45
Company will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a notice
thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4, however, or any defect
therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
<PAGE> 46
ARTICLE V
MISCELLANEOUS
5.1 Redemption. (a) A majority of the Qualified Directors
may, at their option, at any time prior to the close of business on the
Flip-in Date, elect to redeem all (but not less than all) the then out-
standing Rights at the Redemption Price and the Company, at its option,
may pay the Redemption Price either in cash or shares of Common Stock
or other securities of the Company deemed by a majority of the
Qualified Directors, in the exercise of their sole discretion, to be at
least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Qualified Directors
electing to redeem the Rights (or, if the resolution of the Qualified
Directors electing to redeem the Rights states that the redemption will
not be effective until the occurrence of a specified future time or
event, upon the occurrence of such future time or event), without any
further action and without any notice, the right to exercise the Rights
will terminate and each Right will thereafter represent only the right
to receive the Redemption Price in cash or securities, as determined by
the Qualified Directors. Promptly after the Rights are redeemed, the
Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice in
accordance with Section 5.9.
<PAGE> 47
5.2 Expiration. The Rights and this Agreement shall expire
at the Expiration Time and no Person shall have any rights pursuant to
this Agreement or any Right after the Expiration Time, except, if the
Rights are exchanged or redeemed, as provided in Section 3.1 or 5.1
hereof.
5.3 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 number or kind or
class of shares of stock purchasable upon exercise of Rights made in
accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the
Company following the Separation Time and prior to the Expiration Time
pursuant to the terms of securities convertible or redeemable into
shares of Common Stock or to options, in each case issued or granted
prior to, and outstanding at, the Separation Time, the Company shall
issue to the holders of such shares of Common Stock, Rights
Certificates representing the appropriate number of Rights in
connection with the issuance or sale of such shares of Common Stock;
provided, however, in each case, (i) no such Rights Certificate shall
be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
<PAGE> 48
adverse tax consequences to the Company or to the Person to whom such
Rights Certificates would be issued, (ii) no such Rights Certificates
shall be issued if, and to the extent that, appropriate adjustment
shall have otherwise been made in lieu of the issuance thereof, and
(iii) the Company shall have no obligation to distribute Rights
Certificates to any Acquiring Person or Affiliate or Associate of an
Acquiring Person or any transferee of any of the foregoing.
5.4 Supplements and Amendments. The Company by a majority
vote of the Qualified Directors and the Rights Agent may from time to
time supplement or amend this Agreement without the approval of any
holders of Rights (i) prior to the close of business on the Flip-in
Date, in any respect and (ii) after the close of business on the Flip-
in Date, to make any changes that the Company may deem necessary or
desirable and which shall not materially adversely affect the interests
of the holders of Rights generally or in order to cure any ambiguity or
to correct or supplement any provision contained herein which may be
inconsistent with any other provisions herein or otherwise defective;
provided, however, that no person who is employed by, Affiliated with
or a nominee (other than a nominee for Independent Director (as such
term is defined in the Shareholder Agreement) or representative of any
Person that is a member of any group (as defined under Rule 13d-5 of
the Securities Exchange Act of 1934, as such Rule is in effect
<PAGE> 49
on the date of this Agreement) that Beneficially Owns 25 percent or
more of the Total Voting Power of the Company or employed by or
Affiliated with any of such Person's Subsidiaries, excluding for the
purpose of the foregoing any Affiliation by reason of being a member on
the Board of Directors of the Company or its Subsidiaries, shall be a
Qualified Director with respect to any vote to amend this first proviso
or any vote to exempt, directly or indirectly, any member of such Group
or any Affiliates or Associates of such member from the definition of
Acquiring Person; provided, further, that a vote of 75% of the entire
Board will be required to amend, directly or indirectly, this second
proviso or the definition of Acquiring Person with respect to any
Person that is a party to the Shareholder Agreement. The Rights Agent
will duly execute and deliver any supplement or amendment hereto
requested by the Company which satisfies the terms of the preceding
sentence.
5.5 Fractional Shares. If the Company elects not to issue
certificates representing fractional shares upon exercise or redemption
of Rights, the Company shall, in lieu thereof, in the sole discretion
of the Board of Directors, either (a) evidence such fractional shares
by depositary receipts issued pursuant to an appropriate agreement
between the Company and a depositary selected by it, providing that
each holder of a depositary receipt shall have all of the rights,
privileges and preferences to which such holder
<PAGE> 50
would be entitled as a Beneficial Owner of such fractional share, or
(b) sell such shares on behalf of the holders of Rights and pay to the
registered holder of such Rights the appropriate fraction of price per
share received upon such sale.
5.6 Rights of Action. Subject to the terms of this Agreement
(including Section 3.1(b)), rights of action in respect of this Agree-
ment, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of
any Rights, without the consent of the Rights Agent or of the holder of
any other Rights, may, on such holder's own behalf and for such
holder's own benefit and the benefit of other holders of Rights,
enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder's Rights in the manner provided
in such holder's Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
<PAGE> 51
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as
such, of any Rights shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of shares or any other securities
which may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 5.8 hereof), or to receive
dividends or subscription rights, or otherwise, until such Rights shall
have been exercised or exchanged in accordance with the provisions
hereof.
5.8 Notice of Proposed Actions. In case the Company shall
propose after the Separation Time and prior to the Expiration Time
(i) to effect or permit a Flip-over Transaction or Event or (ii) to
effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a Right, in
accordance with Section 5.9 hereof, a notice of such proposed action,
which shall specify the date on which such Flip-over Transaction or
Event, liquidation, dissolution, or winding up is to take place, and
such notice shall be so
<PAGE> 52
given at least 20 Business Days prior to the date of the taking of such
proposed action.
5.9 Notices. Notices or demands authorized or required by
this Agreement to be given or made by the Rights Agent or by the holder
of any Rights to or on the Company shall be sufficiently given or made
if delivered or sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
Paracelsus Healthcare Corporation
515 West Greens Road
Suite 800
Houston, TX 77067
Attention: General Counsel
Any notice or demand authorized or required by this Agreement to be
given or made by the Company or by the holder of any Rights to or on
the Rights Agent shall be sufficiently given or made if delivered or
sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services L.L.C.
Four Station Square
3rd floor
Pittsburgh, Pennsylvania 15219
Attention: Administration Department
Notices or demands authorized or required by this Agreement to be given
or made by the Company or the Rights Agent to or on the holder of any
Rights shall be sufficiently given or made if delivered or sent by
first-class mail, postage
<PAGE> 53
prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the
Separation Time, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the
Company determines in good faith that some action will or need be taken
pursuant to Section 3.1 or to comply with federal or state securities
laws, the Company by a majority vote of the Qualified Directors may
suspend the exercisability of the Rights for a reasonable period in
order to take such action or comply with such laws. In the event of
any such suspension, the Company shall issue as promptly as practicable
a public announcement stating that the exercisability or
exchangeability of the Rights has been temporarily suspended. Notice
thereof pursuant to Section 5.9 shall not be required.
Failure to give a notice pursuant to the provisions of this
Agreement shall not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the
Company or any other Person the securities of which are purchasable
upon exercise of Rights fails to fulfill any of its obligations
pursuant to this Agreement,
<PAGE> 54
then the Company or such Person will reimburse the holder of any Rights
for the costs and expenses (including legal fees) incurred by such
holder in actions to enforce such holder's rights pursuant to any
Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the
Rights Agent and the holders of the Rights any legal or equitable
right, remedy or claim under this Agreement and this Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent and
the holders of the Rights.
5.14 Determination and Actions by the Qualified Directors or
Board of Directors, Etc. The Qualified Directors shall, except as
otherwise expressly granted to the entire Board of Directors, have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Qualified
Directors 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
<PAGE> 55
administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Qualified Directors or, as applicable, the
Board of Directors 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 of the Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein
for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF INCORPORATION OF THE COMPANY AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH
STATE.
5.17 Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
<PAGE> 56
5.18 Severability. If any term or provision hereof or the
application thereof to any circumstance shall, in any jurisdiction and
to any extent, be invalid or unenforceable, such term or provision
shall be ineffective as to such jurisdiction to the extent of such
invalidity or unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions hereof or the
application of such term or provision to circumstances other than those
as to which it is held invalid or unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
PARACELSUS HEALTHCARE
CORPORATION
By: /s/ Robert C. Joyner
Name: Robert C. Joyner
Title: Senior Vice President
CHASEMELLON SHAREHOLDER
SERVICES L.L.C.
By: /s/ Marilyn Spisak
Name: Marilyn Spisak
Title: Vice President
<PAGE> 1
EXHIBIT A
[Form of Rights Certificate]
Certificate No. W- _______ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
Rights Certificate
PARACELSUS HEALTHCARE CORPORATION
This certifies that ____________________, or registered
assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the registered holder thereof, subject to
the terms, provisions and conditions of the Shareholder Protection
Rights Agreement, dated as of August 16, 1996 (as amended from time to
time, the "Rights Agreement"), between Paracelsus Healthcare
Corporation, a California corporation (the "Company"), and ChaseMellon
Shareholder Services L.L.C., a Delaware limited liability company, as
Rights Agent (the "Rights Agent," which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from
the Company at any time after the Separation Time (as such term is
defined in the Rights Agreement) and prior to the close of business on
August 16, 2006, one one-hundredth of a fully paid share of
Participating Preferred Stock, par value $.01 per share (the
<PAGE> 2
"Preferred Stock"), of the Company (subject to adjustment as provided
in the Rights Agreement) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of
Election to Exercise duly executed at the principal office of the
Rights Agent in [The City of New York]. The Exercise Price shall
initially be $42.50 per Right and shall be subject to adjustment in
certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the
Rights evidenced hereby may entitle the registered holder thereof to
purchase securities of an entity other than the Company or securities
or assets of the Company other than Preferred Stock, all as provided in
the Rights Agreement.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the principal office of the
Company and are available without cost upon written request.
<PAGE> 3
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor evidencing an
aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered
holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right
evidenced by this Certificate may be (a) redeemed by the Company under
certain circumstances, at its option, at a redemption price of $0.01
per Right or (b) exchanged by the Company under certain circumstances,
at its option, for one share of Common Stock or one one-hundredth of a
share of Preferred Stock per Right (or, in certain cases, other
securities or assets of the Company), subject in each case to
adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of any securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement
or herein be
<PAGE> 4
construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Rights evidenced by this Rights Certificate shall have been exercised
or exchanged as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Date: ____________
ATTEST: PARACELSUS HEALTHCARE
CORPORATION
___________________________ By______________________
Secretary
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
By____________________________
Authorized Signature
<PAGE> 1
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED ________________________ hereby
sells, assigns and transfers unto ___________________
(Please print name
_____________________________________________________
and address of transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_______________ Attorney, to transfer the within Rights Certificate on
the books of the within-named Company, with full power of substitution.
Dated: _______________, 19__
Signature Guaranteed: _________________________
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company
having an office or correspondent in the United States that is a member
of a Medallion Signature Guaranty Program.
------------------------------------------------------------
(To be completed if true)
<PAGE> 2
The undersigned hereby represents, for the benefit of all holders of
Rights and shares of Common Stock, that the Rights evidenced by this
Rights Certificate are not, and, to the knowledge of the undersigned,
have never been, Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_________________________
Signature
------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed
in connection with a purported assignment, the Company will deem the
Beneficial Owner of the Rights evidenced by the enclosed Rights
Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) or a transferee of any of
the foregoing and accordingly will deem the Rights evidenced by such
Rights Certificate to be void and not transferable or exercisable.
<PAGE> 1
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: PARACELSUS HEALTHCARE CORPORATION
The undersigned hereby irrevocably elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the shares of Participating Preferred Stock
issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
___________________________________
Address:
___________________________________
Social Security or Other Taxpayer
Identification Number:
If such number of 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:
___________________________________
Address:
___________________________________
Social Security or Other Taxpayer
Identification Number:
Dated: _______________, 19__
Signature Guaranteed: ____________________________________
Signature
(Signature must correspond to name as
written upon the face of the attached
Rights Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
<PAGE> 2
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company
having an office or correspondent in the United States that is a member
of a Medallion Signature Guaranty Program.
------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all
holders of Rights and shares of Common Stock, that the Rights evidenced
by the attached Rights Certificate are not, and, to the knowledge of
the undersigned, have never been, Beneficially Owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
_________________________
Signature
------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed
in connection with a purported exercise, the Company will deem the
Beneficial Owner of the Rights evidenced by the attached Rights
Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) or a transferee of any of
the foregoing and accordingly will deem the Rights evidenced by such
Rights Certificate to be void and not transferable or exercisable.
<PAGE> 1
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION AND
TERMS OF PARTICIPATING PREFERRED STOCK
OF PARACELSUS HEALTHCARE CORPORATION
Pursuant to Section 202 of the General
Corporation Law of the State of California
We, the undersigned, ____________________ and
____________________, the __________________, and __________,
respectively, of Paracelsus Healthcare Corporation, a California
corporation (the "Corporation"), do hereby certify as follows:
Pursuant to authority granted by the Amended and Restated
Articles of Incorporation of the Corporation, and in accordance with
the provisions of Section 202 of the General Corporation Law of the
State of California, the Board of Directors of the Corporation has
adopted the following resolutions fixing the designation and certain
terms, powers, preferences and other rights of a new series of the
Corporation's Preferred Stock, par value $.01 per share, and certain
qualifications, limitations and restrictions thereon:
RESOLVED, that there is hereby established a series of Pre-
ferred Stock, par value $.01 per share, of the Corporation, and the
designation and certain terms, powers, preferences and other rights
of the shares of such series, and certain qualifications, limitations
and restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series
shall be "Participating Preferred Stock" (hereinafter called
"this Series"). Each share of this Series shall be identical
in all respects
<PAGE> 2
with the other shares of this Series except as to the dates
from and after which dividends thereon shall be cumulative.
(ii) The number of shares in this Series shall initially be
1,500,000, which number may from time to time be increased or
decreased (but not below the number then outstanding) by the
Board of Directors. Shares of this Series purchased by the
Corporation shall be cancelled and shall revert to authorized
but unissued shares of Preferred Stock undesignated as to
series. Shares of this Series may be issued in fractional
shares, which fractional shares shall entitle the holder, in
proportion to such holder's fractional share, to all rights of
a holder of a whole share of this Series.
(iii) The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by
the Board of Directors, but only out of funds legally available
therefor, dividends, (A) on each date that dividends or other
distributions (other than dividends or distributions payable in
Common Stock of the Corporation) are payable on or in respect
of Common Stock comprising part of the Reference Package (as
defined below), in an amount per whole share of this Series
equal to the aggregate amount of dividends or other
distributions (other than dividends or distributions payable in
Common Stock of the Corporation) that would be payable on such
date to a holder of the Reference Package and (B) on the last
day of March, June, September and December in each year, in an
amount per whole share of this Series equal to the excess (if
any) of $10.625 over the aggregate dividends paid per whole
share of this Series during the three month period ending on
such last day. Each such dividend shall be paid to the holders
of record of shares of this Series on the date, not exceeding
sixty days preceding such dividend or distribution payment
date, fixed for the purpose by the Board of Directors in
advance of payment of each particular dividend or distribution.
Dividends on each full and each fractional share of this Series
shall be cumulative from the date such full or fractional share
is originally issued; provided that any such full or fractional
share originally issued after a dividend record date and on or
prior to the dividend payment date to which such
<PAGE> 3
record date relates shall not be entitled to receive the
dividend payable on such dividend payment date or any amount in
respect of the period from such original issuance to such divi-
dend payment date.
The term "Reference Package" shall initially mean
100 shares of Common Stock, [no] par value [$.01] per share
("Common Stock"), of the Corporation. In the event the
Corporation shall at any time after the close of business on
________, 19__* (A) declare or pay a dividend on any Common
Stock payable in Common Stock, (B) subdivide any Common Stock
or (C) combine any Common Stock into a smaller number of
shares, then and in each such case the Reference Package after
such event shall be the Common Stock that a holder of the
Reference Package immediately prior to such event would hold
thereafter as a result thereof.
Holders of shares of this Series shall not be
entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein
provided on this Series.
So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common Stock
or in any other stock ranking junior to this Series as to
dividends and upon liquidation) shall be declared or paid or
set aside for payment or other distribution declared or made
upon the Common Stock or upon any other stock ranking junior to
this Series as to dividends or upon liquidation, nor shall any
Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or
upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation (except by conversion
into or exchange for stock of the Corporation
* For a certificate of designation relating to shares to
be issued pursuant to Section 2.3 of the Rights Agree-
ment, insert the Separation Time. For a certificate of
designation relating to shares to be issued pursuant to
Section 3.1(d) of the Rights Agreement, insert the
Flip-in Date.
<PAGE> 4
ranking junior to this Series as to dividends and upon
liquidation), unless, in each case, the full cumulative
dividends (including the dividend to be due upon payment of
such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall
have been, or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of this Series shall at the same time be
similarly exchanged or changed in an amount per whole share
equal to the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, that
a holder of the Reference Package would be entitled to receive
as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary
or involuntary, the holders of full and fractional shares of
this Series shall be entitled, before any distribution or
payment is made on any date to the holders of the Common Stock
or any other stock of the Corporation ranking junior to this
Series upon liquidation, to be paid in full an amount per whole
share of this Series equal to the greater of (A) $__________*
or (B) the aggregate amount distributed or to be distributed
prior to such date in connection with such liquidation, disso-
lution or winding up to a holder of the Reference Package (such
greater amount being hereinafter referred to as the
"Liquidation Preference"), together with accrued dividends to
such distribution or payment date, whether or not earned or
declared. If such payment shall have been made in full to all
holders of shares of this Series, the holders of shares of this
Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
In the event the assets of the Corporation
available for distribution to the holders of
* Insert an amount equal to 100 times the Exercise Price
in effect as of the Separation Time.
<PAGE> 5
shares of this Series upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts
to which such holders are entitled pursuant to the first
paragraph of this Section (v), no such distribution shall be
made on account of any shares of any other class or series of
Preferred Stock ranking on a parity with the shares of this
Series upon such liquidation, dissolution or winding up unless
proportionate distributive amounts shall be paid on account of
the shares of this Series, ratably in proportion to the full
distributable amounts for which holders of all such parity
shares are respectively entitled upon such liquidation,
dissolution or winding up.
Upon the liquidation, dissolution or winding up of
the Corporation, the holders of shares of this Series then
outstanding shall be entitled to be paid out of assets of the
Corporation available for distribution to its shareholders all
amounts to which such holders are entitled pursuant to the
first paragraph of this Section (v) before any payment shall be
made to the holders of Common Stock or any other stock of the
Corporation ranking junior upon liquidation to this Series.
For the purposes of this Section (v), the
consolidation or merger of, or binding share exchange by, the
Corporation with any other corporation shall not be deemed to
constitute a liquidation, dissolution or winding up of the
Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of
shareholders required by law or by the Restated Certificate of
Incorporation, as amended, of the Corporation, each whole share
of this Series shall, on any matter, vote as a class with any
other capital stock comprising part of the Reference Package
and voting on such matter and shall have the number of votes
thereon that a holder of the Reference Package would have.
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have signed and attested
this certificate on the ____ day of _________, 199_.
_________________________________
Attest:
_________________________
