<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 1, 1995
RAMSAY HEALTH CARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-13849 63-0857352
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Poydras Plaza
639 Loyola Avenue, Suite 1700
New Orleans, Louisiana 70113
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (504) 525-2505
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(Not Applicable)
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of _____
Index to Exhibits at Page _____
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ITEM 5. OTHER EVENTS.
The Board of Directors of Ramsay Health Care, Inc. (the "Company")
declared a dividend distribution of one common share purchase right (the
"Rights") for each outstanding share of common stock, $.01 par value (the
"Common Stock"), of the Company (calculated on the basis as if all outstanding
shares of Class B Preferred Stock, Series C, par value $1.00 per share (the
"Preferred Stock"), were converted into Common Stock immediately prior to the
close of business on August 14, 1995) of the Company to stockholders of record
at the close of business on August 14, 1995. Each Right will entitle the holder
thereof until August 14, 2005 (or, if earlier, the redemption or exchange of the
Rights) to buy one share of Common Stock at an exercise price of $12.00, subject
to certain antidilution adjustments (the "Purchase Price"). The Rights will be
represented by the Common Stock and Preferred Stock certificates and will not be
exercisable, or transferable apart from the Common Stock or the Preferred Stock,
until the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons has acquired beneficial
ownership of 20% or more of the outstanding Common Stock (an "Acquiring Person")
or (ii) 10 business days following the commencement of or announcement of an
intention to make a tender offer or exchange offer upon consummation of which a
person or group would beneficially own 20% or more of such outstanding Common
Stock. However, no person or group of affiliated or associated persons shall be
an "Acquiring Person", and the Rights will not become exercisable or
transferable apart from the Common Stock or the Preferred Stock, by reason of an
acquisition from Paul J. Ramsay, Chairman of the Board of the Company, or from
any affiliate or associate of Mr. Ramsay, of any of the shares of Common Stock
or Preferred Stock currently held by affiliates of Mr. Ramsay or of any shares
of Common Stock issuable pursuant to the Preferred Stock or stock options
currently held by Mr. Ramsay or any affiliated or associated person.
Furthermore, neither Mr. Ramsay nor any affiliated or associated person shall be
an "Acquiring Person", and the Rights will not become exercisable or
transferable apart from the Common Stock, by reason of an acquisition of
beneficial ownership of Common Stock by Mr. Ramsay or any affiliated or
associated persons which does not increase the number of shares of Common Stock
(including shares issuable pursuant to the Preferred Stock) held by Mr. Ramsay
and any persons affiliated or associated with Mr. Ramsay to one share less than
50% of the Common Stock then outstanding (including any shares issuable pursuant
to the Preferred Stock). The date on which the Rights become exercisable is
referred to herein as the "Distribution Date." As soon as practicable following
the Distribution Date, separate certificates representing the Rights will be
mailed to holders of the Common Stock and Preferred Stock as of the close of
business on the Distribution Date. The Rights will first become exercisable on
the Distribution Date, unless earlier redeemed or exchanged, and could then
begin trading separately from the Common Stock and Preferred Stock. The Rights
will at no time have any voting rights.
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In the event that an Acquiring Person shall have acquired beneficial
ownership of 20% or more of the outstanding Common Stock, each holder of a Right
shall thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price, that number of shares of Common Stock which at such time
would have a market value of two times the then current Purchase Price. In the
event that the Company were acquired in a merger or other business combination
transaction or 50% or more of its assets or earning power were sold, proper
provision will be made so that each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price,
that number of shares of common stock of the acquiring company which at the time
of such transaction would have a market value of two times the then current
Purchase Price. Any Rights that are or were beneficially owned at any time on or
after the earlier of the Distribution Date or the Shares Acquisition Date (as
defined in the Rights Agreement) by an Acquiring Person that engages in any of
the events described in the preceding sentence will become null and void and no
holder of such Rights will have any right with respect to such Rights from and
after such occurrence.
The Rights are redeemable in whole, but not in part, at $0.01 per
Right at any time, without notice, prior to the acquisition by an Acquiring
Person of beneficial ownership of 20% or more of the outstanding Common Stock.
The Company shall promptly give public notice of such redemption and, within 10
days of the action of the Board of Directors of the Company ordering such
redemption, the Company shall mail a notice of redemption to all the holders of
the then outstanding Rights. The Rights will expire on August 14, 2005 (unless
earlier redeemed or exchanged). First Union National Bank of North Carolina
("First Union") will be the Rights Agent for the Rights.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower the thresholds of share ownership or potential share
ownership determining the occurrence of certain events which trigger the
exercisability of the Rights to not less than the greater of (i) the sum of
0.001% and the largest percentage of the outstanding shares of Common Stock
owned by any person or group of affiliated or associated persons (other than Mr.
Ramsay and any persons affiliated or associated with Mr. Ramsay) and (ii) 10%,
except that any such amendment may not adversely affect the interests of the
holders of the Rights. Provided there is no Acquiring Person, such amendment may
extend the period of time during which the Rights may be redeemed.
The Purchase Price payable and the number of shares of Common Stock or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the
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grant to holders of the Common Stock of certain rights, options or warrants to
subscribe for the Common Stock or convertible securities at less than the then
current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in the Common Stock) or of
rights, options or warrants (other than those referred to above). With certain
exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price.
As of July 28, 1995 there were 7,709,245 shares of Common Stock issued
and outstanding, 581,550 shares of Common Stock held in the Company's treasury
and approximately 55,368 additional shares of Common Stock which have been
reserved for issuance upon the exercise of options granted under the Company's
stock option plans, upon conversion of the Preferred Stock or for other
purposes. 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 attached Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by its Board of Directors except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors at a time when the Rights are redeemable.
The Rights Agreement (the "Rights Agreement") between the Company and
First Union, as Rights Agent, specifying the terms of the Rights (which includes
as exhibits the form of Right Certificate and the Summary of Rights to Purchase
Common Shares), and a letter agreement between the Company and certain
affiliates of Mr. Ramsay regarding the waiver of certain antidilution
adjustments to the Preferred Stock and the issuance of Rights in respect of the
Preferred Stock, are attached hereto as exhibits and are incorporated herein by
reference. The foregoing description of the Rights is qualified in its entirety
by reference to such exhibits.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
1. Rights Agreement dated as of August 1, 1995 between Ramsay Health Care,
Inc. and First Union National Bank of North Carolina, as Rights Agent,
which includes the form of Right Certificate as Exhibit A and the Summary
of Rights to Purchase Common Shares as Exhibit B.
2. Letter Agreement dated June 30, 1995 among Ramsay Health Care, Inc., Ramsay
Holdings HSA Limited and Paul Ramsay Holdings Pty. Limited.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 1, 1995
RAMSAY HEALTH CARE, INC.
By /s/ Gregory H. Browne
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Gregory H. Browne
Chief Executive Officer
and President
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Document Page
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<C> <S> <C>
4.1 Rights Agreement dated as of August 1, 1995 between Ramsay
Health Care, Inc. and First Union National Bank of North
Carolina, as Rights Agent, including a form of Right
Certificate (Exhibit A to the Rights Agreement) and Summary
of Rights to Purchase Common Shares (Exhibit B to the Rights
Agreement).
4.2 Letter Agreement dated June 30, 1995 among Ramsay Health Care,
Inc., Ramsay Holdings HSA Limited and Paul Ramsay Holdings Pty.
Limited.
</TABLE>
<PAGE>
RAMSAY HEALTH CARE, INC.
and
First Union National Bank of North Carolina
Rights Agent
Rights Agreement
Dated as of August 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Certain Definitions......................................... 1
Section 2. Appointment of Rights Agent................................. 4
Section 3. Issuance of Right Certificates.............................. 5
Section 4. Form of Right Certificates.................................. 7
Section 5. Countersignature and Registration........................... 7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates......................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights..................................................... 9
Section 8. Cancellation and Destruction of Right Certificates.......... 10
Section 9. Availability of Common Shares............................... 10
Section 10. Common Shares Record Date................................... 11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights..................................................... 11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.. 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.............................................. 20
Section 14. Fractional Rights and Fractional Shares..................... 21
Section 15. Rights of Action............................................ 22
Section 16. Agreement of Right Holders.................................. 23
Section 17. Right Certificate Holder Not Deemed a Stockholder........... 24
Section 18. Concerning the Rights Agent................................. 24
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 19. Merger or Consolidation or Change of Name of Rights
Agent...................................................... 25
Section 20. Duties of Rights Agent...................................... 26
Section 21. Change of Rights Agent...................................... 28
Section 22. Issuance of New Right Certificates.......................... 29
Section 23. Redemption.................................................. 30
Section 24. Exchange.................................................... 31
Section 25. Notice of Certain Events.................................... 32
Section 26. Notices..................................................... 33
Section 27. Supplements and Amendments.................................. 34
Section 28. Successors.................................................. 34
Section 29. Benefits of this Agreement.................................. 34
Section 30. Severability................................................ 35
Section 31. Governing Law............................................... 35
Section 32. Counterparts................................................ 35
Section 33. Descriptive Headings........................................ 36
Signatures................................................................ 37
</TABLE>
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Common Shares
iii
<PAGE>
RIGHTS AGREEMENT dated as of August 1, 1995 between Ramsay Health Care,
Inc., a Delaware corporation (the "Company"), and First Union National Bank of
North Carolina (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one common share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding (calculated as if all
outstanding shares of Class B Preferred Stock, Series C, $1.00 par value (the
"Class B Preferred Stock"), were converted into Common Shares on the Record
Date, as defined below) on August 14, 1995 (the "Record Date"), each Right
representing the right to purchase one Common Share, upon the terms and subject
to the conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated below:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, (i) no Person shall become an "Acquiring Person" as the result of an
acquisition after the date hereof of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 20% or more of the Common
Shares of the Company then outstanding; provided, however, that if a Person
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shall become the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchase by the Company, become the
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2
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person", (ii) subject to the proviso
in this clause (ii), no Person (an "Acquiror") shall become an "Acquiring
Person" as a result of the acquisition after the date hereof by the Acquiror
from Paul J. Ramsay or from any Person who is an Affiliate or Associate of Paul
J. Ramsay at the time of such acquisition (collectively, the "Ramsay Persons")
of (1) any of the shares of Class B Preferred Stock currently held by any Ramsay
Person, (2) any Common Shares issued pursuant to options or other rights to
purchase Common Shares currently held by any Ramsay Person, (3) any Common
Shares issued pursuant to the Class B Preferred Stock currently held by any
Ramsay Person or (4) any Common Shares currently held by any Ramsay Person;
provided that, at the time of such acquisition, the Acquiror (together with all
of such Person's Affiliates and Associates) are not the Beneficial Owners of
more than 1% or more of the Common Shares of the Company then outstanding and
provided further that, following such acquisition, the Acquiror (together with
all of such Person's Affiliates and Associates) do not become the Beneficial
Owners of an additional 1% or more of the Common Shares of the Company then
outstanding, and (iii) subject to the proviso in this clause (iii), none of the
Ramsay Persons shall become an "Acquiring Person" in the event that any Ramsay
Person (together with all other Ramsay Persons) become the Beneficial Owners
after the date hereof of additional Common Shares; provided that the number of
Common Shares of the Company of which all Ramsay Persons are the Beneficial
Owners does not exceed one Common Share less than 50% of the Common Shares of
the Company then outstanding.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Securities Exchange Act of 1934 (as
amended from time to time, the "Exchange Act"), as in effect on the date of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
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3
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, warrants or options, or otherwise, but other than upon the
exercise of the Rights hereunder; provided, however, that a Person shall not be
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deemed the Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
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not be deemed the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
successor report); or
(iii) which are beneficially owned under Section 1(c)(i) or (ii), directly
or indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent contemplated
by the proviso to Section 1(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to the
percentage of a Person's Beneficial Ownership of securities of the Company,
shall mean the aggregate number of securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York or North Carolina are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided,
--------
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4
however, that if such date is not a Business Day it shall mean 5:00 P.M., New
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York City time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Equity Security" shall have the meaning ascribed to such term in Rule
3a11-1 of the Exchange Act, as in effect on the date of this Agreement.
(i) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(j) "Person" shall mean any individual, firm, corporation, partnership,
trust, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(k) "Redemption Date" shall have the meaning set forth in Section 7 hereof.
(l) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(m) "Subsidiary" of any Person shall mean a Person, at least a majority of
the total outstanding voting power (being the power under ordinary circumstances
(and not merely upon the happening of a contingency) to vote in the election of
directors of the latter Person (if such Person is a corporation) or to
participate in the management and control of the latter Person (if such Person
is not a corporation)) of which is owned, directly or indirectly, by the former
Person or by one or more other Subsidiaries of the former Person or by the
former Person and one or more other Subsidiaries of the former Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company and the holders of the Rights (who,
in
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5
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
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tenth day after the Shares Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary or any entity holding Common
Shares for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 20% or more of the then
outstanding Common Shares (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares (or in the case of the Class B Preferred Stock,
the certificates for such Class B Preferred Stock) registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares (or in the case of Class B Preferred Stock, the Class
B Preferred Stock). As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares (or in the case of Class B Preferred Stock, the Class B Preferred
Stock) as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held (or in the case of the Class B Preferred
Stock, deemed to be held on the Distribution Date
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6
as if the Class B Preferred Stock had been converted into Common Shares on such
Date). As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form of Exhibit B hereto (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common Shares (and Class B
Preferred Stock) as of the close of business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to
certificates for Common Shares (and Class B Preferred Stock) outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares (or Class B Preferred Stock)
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares (or Class B Preferred Stock) represented thereby.
(c) Certificates for Common Shares (and Class B Preferred Stock) which
become outstanding (including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
"This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Ramsay Health
Care, Inc. and First Union National Bank of North Carolina, dated as of
August 1, 1995 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Ramsay Health Care, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Ramsay Health Care, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
<PAGE>
7
receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to or held by any Person who
becomes an Acquiring Person (as defined in the Rights Agreement) may become
null and void."
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares (and Class B
Preferred Stock) represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares (or
Class B Preferred Stock) represented thereby. In the event that the Company
purchases or acquires any Common Shares (or Class B Preferred Stock) after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares (or Class B Preferred Stock) shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares (or Class B Preferred Stock) which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
--------------------------
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the price per Share set forth therein (the "Purchase Price"), but the
number of such Shares and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration. The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or any of its Vice Presidents, either
manually or by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually
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8
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
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to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11 (a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares as
the Right Certificate or Right Certificates surrendered then entitled to such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
<PAGE>
9
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights. (a) The registered holder of any Right Certificate may exercise the
- ------
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each Common Share as to which
the Rights are exercised, at or prior to the earliest of (i) the close of
business on August 14, 2005 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date"), or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price for each Common Share purchasable pursuant to
the exercise of a Right shall initially be $12.00, and shall be subject to
adjustment from time to time as provided in Section 11 or 13 hereof and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased and the Company
<PAGE>
10
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
maintain and make available to the Company and its officers, employees, agents,
accountants, attorneys and representatives all canceled Right Certificates, and
shall not, without the prior written consent of the Company, destroy such
canceled Right Certificates.
Section 9. Availability of Common Shares. The Company covenants and
-----------------------------
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Common Shares or any Common Shares to be held in its
treasury, the number of Common Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Common Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Common Shares
(subject to payment of
<PAGE>
11
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Common Shares in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each Person in whose name any
-------------------------
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
--------
however, that if the date of such surrender and payment is a date upon which the
- -------
Common Shares 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 Common Shares
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Common Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
--------------------------------------------------------
of Rights. The Purchase Price, the number of Common Shares covered by each Right
- ---------
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
<PAGE>
12
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares or (D) issue any shares of
its capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date at a time when the Common Shares
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
-------- -------
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person, each holder of a Right shall thereafter have a
right to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of Common Shares for which a Right is
then exercisable, in accordance with the terms of this Agreement, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of Common Shares for
which a Right is then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 11 (d) hereof) on the date of the occurrence of such event.
In the event that any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of the event of any Person becoming an
Acquiring Person, any Rights that are or were acquired or beneficially owned by
any Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter
<PAGE>
13
have no right to exercise such Rights under any provision of this Agreement. No
Right Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof shall
be canceled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such actions as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the
Company shall, after good faith effort, be unable to take all such actions as
may be necessary to authorize such additional Common Shares, the Company shall
determine the value of the Common Shares issuable upon the exercise of a Right
(the "Current Value") and with respect to each Right, within thirty (30) days of
the event of any Person becoming an Acquiring Person, make adequate provision to
substitute for the Common Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Shares or other
Equity Securities of the Company (including, without limitation, shares, or
units of shares, of common stock or other Equity Securities of the Company which
the Board of Directors of the Company has deemed to have the same value as the
Common Shares (such shares of common stock or other Equity Securities or units
thereof being referred to in this Section 11(a)(iii) as "Common Share Value
Equivalents"), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing (whichever substituted, the "Substitute
Consideration"), having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board of Directors of the
Company (including based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company). If the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above may
be extended to the
<PAGE>
14
extent necessary, but not more than ninety (90) days after the occurrence of
such event, in order that the Company may seek stockholder approval for the
authorization of such additional Common Shares (such period, as it may be
extended, being referred to herein as the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the Common Shares shall be the current market price per share of
the Common Shares on the date of the occurrence of the event of any Person
becoming an Acquiring Person and the value of any Common Share Value Equivalent
shall be deemed to have the same value as the Common Shares on such date.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or shares having the same
rights, privileges and preferences as the Common Shares ("equivalent common
shares") or securities convertible into Common Shares or equivalent common
shares at a price per Common Share or equivalent common share (or having a
conversion price per share, if a security convertible into Common Shares or
equivalent common shares) less than the then current per share market price of
the Common Shares (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares which the
aggregate offering price of the total number of Common Shares and/or equivalent
common shares so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares
and/or equivalent common shares to be offered for subscription or purchase (or
into which the
<PAGE>
15
convertible securities so to be offered are initially convertible); provided,
--------
however, that in no event shall the consideration to be paid upon the exercise
- -------
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Common Shares owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Common Shares) or subscription rights or warrants (excluding those referred to
in Section 11 (b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Common Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares; provided, however, that in
-------- -------
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
<PAGE>
16
(d) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11 (d)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
--------
however, that in the event that the current per share market price of the
- -------
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of
<PAGE>
17
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent of the
Purchase Price; provided, however, that any adjustments which by reason of this
-------- -------
Section 11 (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-thousandth of a
Common Share or any other share or minimum unit of any other security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the Common
Shares contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Common Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Common Shares
(calculated to the nearest ten-thousandth of a Common Share) obtained by (i)
multiplying (x) the number of Common Shares covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to such
<PAGE>
18
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11 (i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
<PAGE>
19
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Common Shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Common Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
--------
however, that the Company shall deliver to such holder a due bill or other
- -------
appropriate instrument evidencing such holder's right to receive such additional
Common Shares or other capital stock or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Shares, issuance
wholly for cash of any Common Shares at less than the current market price,
issuance wholly for cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares, dividends on Common Shares
payable in Common Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Common Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case each
Common Share outstanding immediately after such event shall have issued
<PAGE>
20
with respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power. In the event, directly or indirectly, at any time after a Person
- -------------
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of Common Shares of
the Company for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of Common Shares of the Company, such number of
Common Shares of such other Person (including the Company as successor thereto
or as the surviving corporation) as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of
<PAGE>
21
Common Shares of the Company for which a Right is then exercisable and dividing
that product by (B) 50% of the then current per share market price of the Common
Shares of such other Person (determined pursuant to Section 11 (d) hereof) on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
the issuer of such Common Shares shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or
<PAGE>
22
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Common Share. For the purposes of this Section
14(b), the current market value of a Common Share shall be the closing price of
a Common Share (as determined pursuant to the second sentence of Section 11 (d)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
-----------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares, or the Class B Preferred Stock as the case may be); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares, or the Class B Preferred Stock as the case may be),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares, or the
Class B Preferred Stock as the case may be), may, in his own behalf and for his
own benefit,
<PAGE>
23
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
---------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares, or the Class B
Preferred Stock as the case may be;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate, or the certificate representing the shares
of Class B Preferred Stock as the case may be) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or the associated Common
Shares certificate (or the certificate representing the shares of Class B
Preferred Stock as the case may be) made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by
<PAGE>
24
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
-------- -------
such order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
--------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other action affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. 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, its officers,
employees, agents and directors for, and to hold each of them harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent or such other indemnified party in connection with the
acceptance or administration of this Agreement or the exercise or performance of
the Rights Agent's duties hereunder, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected by the Company 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 or the exercise or
performance of its duties hereunder in reliance upon any
<PAGE>
25
Right Certificate or certificate for the Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
----------------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
<PAGE>
26
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
-----------------------
duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent) upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person, Affiliate
or Associate and the determination of "Current Value") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any person believed in good faith by the Rights Agent to
be one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
<PAGE>
27
(e) The Rights Agent is serving as an administrative agent and,
accordingly, shall not be under any responsibility in respect of the validity of
any provision of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; not shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11 (a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for herein, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice to the Rights Agent
of such change or adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this 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 in good faith by the Rights Agent to be one of the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action
<PAGE>
28
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct 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.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights
<PAGE>
29
Agent, as the case may be, and to each transfer agent of the Common Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New York, in good standing, having an office in the State of New York,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities-as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and
<PAGE>
30
the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
-------- -------
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued and
(ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption. (a) The Board of Directors of the Company may,
----------
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
-------- -------
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
<PAGE>
31
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of Common Shares (or Class B Preferred
Stock) prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
--------
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
--------
however, that the failure to give, or any defect in, such notice shall not
- -------
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common
<PAGE>
32
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second, sentence
of Section 11(d) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
------------------------
propose (i) to pay any dividend payable in stock of any class to the holders of
its Common Shares or to make any other distribution to the holders of its Common
Shares (other than a cash dividend), (ii) to offer to holders of its Common
Shares rights or warrants to subscribe for or to purchase any additional Common
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification, subdivision, combination or
consolidation of its Common Shares (other than by payment of dividends in Common
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or
<PAGE>
33
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the Common Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares, whichever shall be
the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
--------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Ramsay Health Care, Inc.
One Poydras Plaza
Suite 1700
639 Loyola Avenue
New Orleans, Louisiana 70113
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Union National Bank of
North Carolina
230 South Tryon Street
Charlotte, North Carolina 28288
Attention: Corporate Trust Department
<PAGE>
34
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
--------------------------
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
-------- -------
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections 1(a) and 3(a) to not less than the greater of (i) the sum of .001 % and
the largest percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than the Ramsay Persons,
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan) and (ii) 10%. Notwithstanding
anything contained in this Agreement to the contrary, no direct or indirect
amendment to Sections 18 through 21 hereof or the subject matter of such
Sections shall be effective without the consent of the Rights Agent.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
---------------------------
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares and the Class B Preferred
Stock) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights
<PAGE>
35
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares and the Class B Preferred Stock).
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, without regard to any conflict of laws
principles which would apply the laws of any other jurisdiction.
Section 32. 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>
36
Section 33. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
* * * *
<PAGE>
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
RAMSAY HEALTH CARE, INC.
Attest:
By: /s/ Stacy Sims By: /s/ Gregory H. Browne
----------------------- --------------------------
Name: Stacy Sims Name: Gregory H. Browne
Title: Administrative Title: Chief Executive
Assistant Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
Attest:
By: /s/ Francis S. Beam By: /s/ Melissa H. Sullivan
----------------------- --------------------------
Name: Francis S. Beam Name: Melissa H. Sullivan
Title: Vice President Title: Vice President
<PAGE>
Exhibit A
---------
Form of Right Certificate
Certificate No. R-
Rights
NOT EXERCISABLE AFTER AUGUST 14, 2005 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
RAMSAY HEALTH CARE, INC.
This certifies that , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of August 1, 1995 (the "Rights Agreement") between
Ramsay Health Care, Inc., a Delaware corporation (the "Company"), and First
Union National Bank of North Carolina (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York City time, on August 14, 2005
at the principal office of the Rights Agent, or at the office of its successor
as Rights Agent, one fully paid non-assessable share of Common Stock, par value
$0.01 per share (the "Common Shares"), of the Company, at a purchase price of
$12.00 per Common Share (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
Common Shares which may be purchased upon exercise hereof) set forth above, and
the Purchase Price set forth above, are the number and Purchase Price as of
August 14, 1995, based on the Common Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of Common
Shares which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the occurrence
of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by
<PAGE>
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $0.01 per Right or (ii) may be exchanged in whole or in part for Common
Shares.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of__________
ATTEST: RAMSAY HEALTH CARE, INC.
By: ________________________ By: _______________________
Countersigned:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: _______________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate -- Continued
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________ hereby sells,
assigns and transfers unto___________________________
___________________________________________________________________
(Please print name and address of transferee)
___________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _______________
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: RAMSAY HEALTH CARE, INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Common Shares issuable
upon the exercise of such Rights and requests that certificates for such Common
Shares be issued in the name of
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ______________________
______________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
NOTICE
------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
<PAGE>
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
The Board of Directors of Ramsay Health Care, Inc. (the "Company") declared a
dividend of one common share purchase right (a "Right") for each outstanding
share of common stock, par value $0.01 per share (the "Common Shares"), of the
Company (calculated on the basis as if all outstanding shares of Class B
Preferred Stock, Series C (the "Preferred Stock"), were converted into Common
Shares immediately prior to the close of business on August 14, 1995). The
dividend is payable on August 14, 1995 (the "Record Date") to the stockholders
of record on that date. Each Right entitles the registered holder to purchase
from the Company one Common Share of the Company at a price of $12.00 per Common
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and First Union National Bank of North Carolina as Rights
Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 20% or more of the outstanding Common Shares or
(ii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Shares, the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of this Summary
of Rights attached thereto. However, no person or group of affiliated or
associated persons shall be an "Acquiring Person", and the Rights will not
become exercisable or transferable apart from the Common Shares or the Preferred
Stock, by reason of an acquisition from Paul J. Ramsay, Chairman of the Board of
the Company, or from any affiliate or associate of Mr. Ramsay, of any of the
Common Shares or Preferred Stock currently held by affiliates of Mr. Ramsay or
of any Common Shares issuable pursuant to the Preferred Stock or stock options
currently held by Mr. Ramsay or any affiliated or associated person.
Furthermore, neither Mr. Ramsay nor any affiliated or associated person shall be
an "Acquiring Person", and the Rights will not become exercisable or
transferable apart from the Common Shares, by reason of an acquisition of
beneficial ownership of Common Shares by Mr. Ramsay or any affiliated or
associated persons which does not increase the number of Common Shares
(including Common Shares issuable pursuant
<PAGE>
2
to the Preferred Stock) held by Mr. Ramsay and any persons affiliated or
associated with Mr. Ramsay to one share less than 50% of the Common Shares then
outstanding (including any shares issuable pursuant to the Preferred Stock).
The date on which the Rights become exercisable is referred to herein as the
"Distribution Date."
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on August 14, 2005 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Common Shares or other securities
or property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of the Common Shares or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or assets (excluding regular periodic
cash dividends paid out of earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights or warrants (other than those referred
to above).
The number of outstanding Rights and the number of Common Shares issuable upon
exercise of each Right are also subject to adjustment
<PAGE>
3
in the event of a stock split of the Common Shares or a stock dividend on the
Common Shares payable in Common Shares or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case, prior to the
Distribution Date.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earnings
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Common Shares will be issued and in lieu thereof,
an adjustment in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
<PAGE>
4
The terms of the Rights may be amended by the Board of Directors of the Company
without the consent of the holders of the Rights, including an amendment to
lower certain thresholds described above to not less than the greater of (i) the
sum of 0.001% and the largest percentage of the outstanding Common Shares then
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than Mr. Ramsay and any persons
affiliated or associated with Mr. Ramsay) and (ii) 10%, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A dated August 1,
1995. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
<PAGE>
RAMSAY HOLDINGS HSA LIMITED
PAUL RAMSAY HOLDINGS PTY. LIMITED
c/o Ramsay Health Care Pty. Limited
154 Pacific Highway
Greenwich, NSW 2065 Australia
June 30, 1995
Ramsay Health Care, Inc.
639 Loyola Avenue
Suite 1700
New Orleans, Louisiana 70113
Dear Sirs:
Ramsay Holdings HSA Limited, a Barbados corporation, and Paul Ramsay
Holdings Pty. Limited, an Australian corporation (collectively, the "Holders"),
are the holders of all of the outstanding shares of Class B Preferred Stock,
Series C, par value $1.00 per share (the "Preferred Stock"), of Ramsay Health
Care, Inc., a Delaware corporation (the "Company"). The Company wishes to adopt
a stockholder rights plan (the "Rights Plan") which would provide, among other
things, for the issuance to its stockholders of rights (the "Rights") to
purchase shares of Common Stock, par value $0.01 per share ("Common Stock"), of
the Company, exercisable upon the occurrence of certain events, all to be more
fully described in a rights agreement to be entered into between the Company and
First Union National Bank of North Carolina in connection with the Rights Plan,
a copy of which shall be on file at the principal offices of the Company (as
amended from time to time, the "Rights Agreement"). The Certificate of
Designation of the Preferred Stock filed with the Secretary of State of the
State of Delaware on June 29, 1993 (the "Certificate") provides for certain
anti-dilution adjustments to the number of shares of Common Stock into which
each share of Preferred Stock is convertible.
As contemplated by subparagraph (e)(iv) of the Certificate, on the
record date established to determine the stockholders of the Company entitled to
receive Rights under the Rights Plan, the Company hereby agrees to (in
accordance with the terms of the Rights Plan) issue to the Holders a number of
Rights equal to the number of Rights which would have been issued to the Holders
had the shares of Preferred Stock been converted into shares of Common Stock
immediately prior to such record date in
<PAGE>
Ramsay Health Care, Inc.
Page 2
accordance with the terms of the Certificate (the "Preferred Distribution"). In
consideration of the Preferred Distribution, the Holders hereby agree
irrevocably to waive any and all adjustments to the Conversion Price (as defined
in the Certificate) which may result from (i) any issuance of Rights from time
to time pursuant to the Rights Agreement, (ii) any changes in the exercise price
of, or number of Common Shares (as defined in the Rights Agreement) issuable
pursuant to, Rights and (iii) any issuance of Common Shares upon the exercise of
Rights; and the parties hereto agree that no such adjustments shall be made. In
addition, and in consideration of the Preferred Distribution, the Holders hereby
agree that, notwithstanding the terms of the Rights Plan, the Rights Agreement
or otherwise, they shall not be entitled to receive any additional Rights (in
addition to the Preferred Distribution) upon any conversion of the Preferred
Stock into shares of Common Stock; any such additional Rights being hereby
irrevocably waived. In the event that any Holder shall receive any such
additional Rights, such Holder hereby agrees to deliver such additional Rights
to the Company unexercised for cancellation (it being further agreed that unless
the Rights and shares of Common Stock are separately tradeable at the time, the
appropriate number of Rights received by the Holders as the Preferred
Distribution shall be attendant to the shares of Common Stock issued upon any
conversion of the Preferred Stock into Common Stock).
In the event that the number of shares of Common Stock into which the
Preferred Stock is convertible changes after the date hereof (in accordance with
the terms of the Certificate) then (i) in the event that the number of shares of
Common Stock increases from time to time, the Company hereby agrees to issue to
the Holders a number of additional Rights equal to the increase in the number of
shares of Common Stock into which the Preferred Stock is convertible or (ii) in
the event that the number of shares of Common Stock decreases from time to time,
and at the time the Rights are not freely tradeable, the Holders hereby agree to
deliver to the Company unexercised for cancellation a number of Rights equal to
the decrease in the number of shares of Common Stock into which the Preferred
Stock is convertible.
The Holders agree that the shares of Preferred Stock shall continue to
be subject to the terms of this letter agreement after any transfer thereof.
Any transferee of any shares of Preferred Stock shall, by accepting such shares,
be deemed to be a "Holder" subject to this letter agreement and to have agreed
to the terms and conditions hereof applicable to the Holders.
<PAGE>
Ramsay Health Care, Inc.
Page 3
The Holders agree that each certificate from time to time representing
shares of Preferred Stock shall bear the legend required to be set forth on such
certificate by the Rights Agreement and a legend to the following effect (and
that they shall take all action necessary to place such legend on currently
outstanding stock certificates representing the Preferred Stock):
"This Certificate represents securities which are subject to the
terms and conditions of that certain Letter Agreement dated June 30,
1995 by and among Ramsay Holdings HSA Limited, a Barbados corporation,
Paul Ramsay Holdings Pty. Limited, an Australian corporation, and the
Corporation (a copy of which is on file at the principal office of the
Corporation)."
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware governing agreements made and to be
performed entirely within such State, without regard to any conflict of laws
principles which would apply to the laws of any other jurisdiction. This letter
agreement may be executed in counterparts, each of which taken together shall
constitue one and the same letter agreement.
* * * *
<PAGE>
Ramsay Health Care, Inc.
Page 4
Please indicate your agreement with the foregoing by signing a copy of
this letter agreement where indicated below.
RAMSAY HOLDINGS HSA LIMITED
By: /s/ Peter Evans
-------------------------------
Name: Peter Evans
Title: Director
PAUL RAMSAY HOLDINGS PTY. LIMITED
By: /s/ Peter Evans
--------------------------------
Name: Peter Evans
Title: Director
Accepted and Agreed as of
the date first above written.
RAMSAY HEALTH CARE, INC.
By: /s/ Reynold J. Jennings
----------------------------
Name: Reynold J. Jennings
Title: President and Chief
Operating Officer
