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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
HEALTHSOURCE, INC.
(Exact name of Registrant as specified in its charter)
New Hampshire 02-0387748
(State of incorporation or (I.R.S. Employer Identification No.)
organization)
Two College Park Drive, Hooksett, NH 03106
(Address of principal executive (Zip Code)
offices)
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common Stock Purchase Rights New York Stock Exchange
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. / /
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. / /
Securities to be registered pursuant to Section 12(g) of the Act:
N/A
--------------------
(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. Description of Registrant's Securities to be Registered.
The Board of Directors of Healthsource, Inc. (the "Company")
has approved a Rights Agreement (the "Rights Agreement") dated as of
July 29, 1996 between the Company and The Bank of New York, as Rights
Agent . Pursuant to the Rights Agreement, each holder of Common
Stock, $.10 par value of the Company outstanding as of the close of
business on August 12, 1996 and thereafter until the occurrence of a
"Distribution Date" (as defined below), will receive as a
distribution one right ("Rights") per share to purchase additional
shares of Common Stock at a purchase price (the "Purchase Price") of
$70 per share, subject to adjustment. The Rights will remain
outstanding until August 12, 2006, unless earlier redeemed by the
Company. The Rights Agreement was not entered into in response to any
attempt or proposal to acquire control of the Company.
Until the occurrence of a Distribution Date, the Rights will be
evidenced by the certificates for the Common Stock with which such
Rights are associated and will be transferable only with such shares
of Common Stock. Common Stock certificates will include a notation
incorporating the terms of the Rights Agreement. The Rights will
separate from the Common Stock and a "Distribution Date" will occur
upon the earlier of (i) ten business days following the date the
Company learns that any person, together with its affiliates and
associates (an "Acquiring Person"), has acquired beneficial ownership
of Common Stock equal to 20% of the then-outstanding Common Stock or
(ii) a date designated by the Board of Directors of the Company
following the announcement of the commencement of, or an intention to
commence, a tender or exchange offer that could result in a person
becoming an Acquiring Person. The Board may in its sole discretion
elect to defer the Distribution Date of the Rights beyond the dates
described above. The Rights are not exercisable prior to the
Distribution Date.
Following the Distribution Date, separate certificates evidencing the
Rights will be mailed to the holders of the associated Common Stock on
the Distribution Date, except the Acquiring Person. The Rights held by
an Acquiring Person and its affiliates and associates will become null
and void and may not be transferred to any other person. For all other
persons, the Rights will become exercisable on the Distribution Date
at the $70 Purchase Price per share of Common Stock. Upon a person
becoming an Acquiring Person following a Distribution Date (or the
occurrence of a Distribution Date following the time a person becomes
an Acquiring Person), the Purchase Price will be adjusted so that each
holder of a Right (other than the Acquiring Person and its affiliates
and associates) will have the right to receive, upon payment of the
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$70 Purchase Price, a number of shares of Common Stock equal in market
value to twice the Purchase Price. Alternatively, following such an
event, the Board of Directors may elect to exchange the Rights (other
than those held by an Acquiring Person or its affiliates and
associates) for one half of the securities or other consideration for
which the Rights are exercisable, without the payment of the Purchase
Price by the holders of the Rights.
In the event that, following a Distribution Date, the Company shall
(i) merge or consolidate with a Acquiring Person or any affiliate or
associate of the Acquiring Person or (ii) sell, lease or otherwise
dispose of assets having a fair market value of 50% of the Company's
assets, having a book value of 50% of the Company's total assets or
accounting for 50% of the Company's earnings, to an Acquiring Person,
then the Rights will become exercisable for securities of the
surviving or acquiring corporation (or another affiliate of the
Acquiring Person) equal in market value (or book value, if not
publicly traded) to twice the Purchase Price.
No holder of Rights, as such, will be entitled to vote or to receive
dividends or be deemed, for any purpose, to be a holder of the shares
of Common Stock or any other securities which may be issuable upon
exercise of such Rights.
The Board of Directors of the Company may redeem all of the Rights at
a price of $.001 per Right at any time prior to the time that a person
becomes an Acquiring Person following a Distribution Date (or the
occurrence of a Distribution Date following the time a person becomes
an Acquiring Person). The Rights are not exercisable at any time
during which the Rights remain redeemable. Immediately upon the action
by the Company's Board of Directors to redeem the Rights, the Rights
will terminate and the only right of the holders of the Rights will be
to receive the redemption Price. Notwithstanding the above, in the
event that a majority of the Board of Directors is elected by written
consent or is comprised of persons elected at a meeting of
stockholders who were not nominated by the Board of Directors in
office immediately prior to such meeting, then for a period of 180
days following the effectiveness of such election, the Rights may not
be redeemed if such redemption is reasonably likely to result in
allowing any person to become an Acquiring Person.
Prior to a Distribution Date, the Company may amend the terms of the
Rights Agreement in any manner without the approval of any holder of
Rights. Following a Distribution Date, the Company may only amend the
Rights Agreement to cure an ambiguity or defective provision or to
make another change which does not adversely affect the holders of the
Rights.
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Under the Rights Agreement, the Company has covenanted to keep
available out of its authorized and unissued Common Stock a number of
shares of Common Stock sufficient to permit the exercise in full of
all outstanding Rights. In the event that the Company does not have
sufficient shares of Common Stock available out of its authorized and
unissued Common Stock, it may instead issue pursuant to the exercise
of the Rights cash or other securities having an equivalent value.
The Rights have certain anti-takeover effects. If exercised, the
Rights will cause substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the Company's
Board of Directors. The Rights should not interfere with any merger or
other business combination approved by the Board of Directors inasmuch
as the Rights may be redeemed by the Company prior to the time a
person or group becomes an Acquiring Person. The existence of the
Rights may have the effect of discouraging a person or group from
taking a substantial equity interest in the Company or seeking to
obtain control of the Company without negotiating with the Board of
Directors.
The foregoing description of the Rights Agreement is qualified in its
entirety by reference to the full text of the Rights Agreement, which
is attached hereto as Exhibit 1.
ITEM 2. Exhibits.
1. Rights Agreement dated as of July 29, 1996 between Healthsource, Inc.
and The Bank of New York, as Rights Agent.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, Healthsouce, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
HEALTHSOURCE, INC.
Dated: August 2, 1996 By: /S/ JOSEPH M. ZUBRETSKY
Name: Joseph M. Zubretsky
Title: Chief Financial Officer
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RIGHTS AGREEMENT
Dated as of July 29, 1996
between
HEALTHSOURCE, INC.
and
THE BANK OF NEW YORK
as Rights Agent
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<TABLE>
Table of Contents
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<CAPTION>
Section Page
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<S> <C>
SECTION 1. Certain Definitions..................................................2
SECTION 2. Appointment of Rights Agent..........................................8
SECTION 3. Issue of Rights and Right Certificates.............................. 8
SECTION 4. Form of Right Certificates.......................................... 9
SECTION 5. Execution, Countersignature and Registration........................10
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates; Uncertificated Rights.................................10
SECTION 7. Exercise of Rights; Expiration Date of Rights.......................11
SECTION 8. Cancellation and Destruction of Right Certificates..................12
SECTION 9. Reservation and Availability of Common Stock........................13
SECTION 10. Record Date for Shares Upon Exercise of Rights......................14
SECTION 11. Adjustments in Rights After There Is an Acquiring Person;
Exchange of Rights for Shares; Business Combinations................14
SECTION 12. Certain Adjustments.................................................18
SECTION 13. Certificate of Adjustment...........................................19
SECTION 14. Additional Covenants................................................19
SECTION 15. Fractional Shares...................................................20
SECTION 16. Rights of Action....................................................20
SECTION 17. Transfer and Ownership of Rights and Right Certificates.............21
SECTION 18. Right Certificate Holder Not Deemed a Stockholder...................21
SECTION 19. Concerning the Rights Agent.........................................21
SECTION 20. Merger or Consolidation or Change of Rights Agent...................22
SECTION 21. Duties of Rights Agent..............................................22
SECTION 22. Change of Rights Agent..............................................25
SECTION 23. Issuance of Additional Rights and Right Certificates................26
SECTION 24. Redemption and Termination..........................................26
SECTION 25. Notices.............................................................27
SECTION 26. Supplements and Amendments..........................................28
SECTION 27. Successors..........................................................28
SECTION 28. Benefits of Rights Agreement; Determinations and Actions
by the Board of Directors, etc......................................29
SECTION 29. Severability........................................................29
SECTION 30. Governing Law.......................................................29
SECTION 31. Counterparts; Effectiveness.........................................29
SECTION 32. Descriptive Headings................................................30
</TABLE>
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Exhibit
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A Form of Right Certificate
B Summary of Rights Plan
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This RIGHTS AGREEMENT, dated as of July 29, 1996, is made between
HEALTHSOURCE, INC., a New Hampshire corporation (the "Company") , and THE BANK
OF NEW YORK, a New York banking corporation, as Rights Agent (the "Rights
Agent").
The Board of Directors of the Company has authorized and declared a
distribution of one Right (as hereinafter defined) for each share of Common
Stock, par value $. 10 per share, of the Company (the "Common Stock")
outstanding at the Close of Business (as hereinafter defined) on August 12, 1996
(the "Record Date"), and has authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of this Rights
Agreement) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Expiration Date (as such terms are hereinafter
defined); PROVIDED, HOWEVER, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the earlier of the Redemption Date or the Expiration Date in accordance with
the provisions of Section 23. Each Right shall initially represent the right to
purchase one share of Common Stock.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Rights Agreement,
the following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of the Capital Shares then outstanding that equals or exceeds such Person's
Ownership Threshold, but shall not include (a) the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any of its
Subsidiaries, or any Person holding Capital Shares for or pursuant to the terms
of any such employee benefit plan or (b) any such Person who has become such a
Beneficial Owner solely because (i) of a change in the aggregate number of
Capital Shares outstanding since the last date on which such Person acquired
Beneficial Ownership of any Capital Shares or (ii) it acquired such Beneficial
Ownership in the good faith belief that such acquisition would not cause such
Beneficial Ownership to exceed such Person's Ownership Threshold and such Person
relied in good faith in computing the percentage of its Beneficial Ownership on
publicly filed reports or documents of the Company which are inaccurate or
out-of-date. Notwithstanding clause (b) of the prior sentence, if any Person
that is not an Acquiring Person due to such clause (b) acquires additional
Capital Shares after notice from the Company that such Person's Beneficial
Ownership of Capital Shares so exceeds such Person's Ownership Threshold, such
Person shall immediately become an Acquiring Person (and such clause (b) shall
no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
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"AFFILIATE" and "ASSOCIATE", when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Rights Agreement.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL OWNERSHIP" of,
any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Rights Agreement;
(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, arrangement or understanding (written or oral), or upon
the exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; PROVIDED, HOWEVER, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, or to have Beneficial Ownership of, securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange thereunder, or (B) the right to
vote pursuant to any agreement, arrangement or understanding (written or
oral); PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if (1) the
agreement, arrangement or understanding (written or oral) to vote such
security arises solely from a revocable proxy or consent given to such
Person pursuant to a definitive proxy statement filed with the
Securities and Exchange Commission and otherwise in accordance with, the
applicable rules and regulations under the Exchange Act and (2) the
beneficial ownership of such security is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(written or oral) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (ii) (B) of this
definition) or disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
"BOOK VALUE", when used with reference to Capital Shares issued by any
Person, shall mean the amount of equity of such Person applicable to each
Capital Share, determined (i) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except
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that no value shall be included in such assets for goodwill arising from
consummation of a business combination, and (iii) after giving effect to (A) the
exercise of all rights, options and warrants to purchase such Capital Shares
(other than the Rights), and the conversion of all securities convertible into
such Capital Shares, at an exercise or conversion price, per Capital Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (B) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (C) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action prior to the date as of which such Book Value is to be
determined which would have the effect of thereafter reducing such Book Value.
"BUSINESS COMBINATION" shall have the meaning set forth in Section
11(c)(I).
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close or a day that is
declared a national or New York State holiday.
"CAPITAL SHARES", when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock or any other shares
of capital stock of the Company into which the Common Stock shall be
reclassified or changed. "Capital Shares", when used with reference to any
Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; PROVIDED, HOWEVER, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Capital Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New York
City time, on such date; PROVIDED, HOWEVER, that, if such date is not a Business
Day, "Close of Business" shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"COMMON STOCK" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
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"COMPANY" shall have the meaning set forth in the heading of this Rights
Agreement; PROVIDED, HOWEVER, that if there is a Business Combination, "Company"
shall have the meaning set forth in Section 11(c)(III).
The term "CONTROL" with respect to any Person shall mean the power to
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"DISTRIBUTION DATE" shall have the meaning set forth in Section 3(b).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided.
"EXCHANGE CONSIDERATION" shall have the meaning set forth in Section
11(b)(I).
"EXPIRATION DATE" shall have the meaning set forth in Section 7(a).
"MAJOR PART", when used with reference to the assets of the Company and
its Subsidiaries as of any date, shall mean assets (i) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (ii) accounting for 50% or more of the total value (net of
depreciation and amortization) of all the assets of the Company and its
Subsidiaries (taken as a whole) as would be shown on a consolidated or combined
balance sheet of the Company and its Subsidiaries as of the date in question,
prepared in accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of earnings
before interest, taxes, depreciation and amortization or revenues of the Company
and its Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"MARKET VALUE", when used with reference to any class of Capital Shares
on any date, shall be deemed to be the average of the daily closing prices, per
share, of any such class for the period which is the shorter of (1) 30
consecutive Trading Days immediately prior to the date in question or (2) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; PROVIDED, HOWEVER, that, in the event
that the Market Value of such class of Capital Shares is to be determined in
whole or in part during a period following the announcement by the issuer of
such class of Capital Shares of any action of the type described in Section
12(a) that would require an adjustment thereunder, then, and in each such case,
the Market Value of such class shall be appropriately adjusted to reflect the
effect of such action on
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the market price of such class. The closing price for each Trading Day shall be
the closing price quoted on the composite tape for securities listed on the New
York Stock Exchange, or, if such securities are not quoted on such composite
tape or if such securities are not listed on such exchange, on the principal
United States securities exchange registered under the Exchange Act (or any
recognized foreign stock exchange) on which such securities are listed, or, if
such securities are not listed on any such 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 with respect to a share of such securities as reported
by the National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or such other system then in use, or if no such quotations are
available, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such securities selected by the
Board of Directors of the Company. If on any such Trading Day no market maker is
making a market in such securities for any reason, the closing price of such
securities on such Trading Day shall be deemed to be the fair value of such
securities as determined in good faith by the Board of Directors of the Company
(whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent, the holders of Rights and all
other Persons).
"OWNERSHIP THRESHOLD" shall mean, with respect to any Person, Beneficial
Ownership of 20% of the Capital Shares at any time outstanding.
"PERSON" shall mean an individual, corporation, limited liability
company, partnership, limited partnership, limited liability partnership, joint
venture, association, trust, unincorporated organization or other entity.
"PRINCIPAL PARTY" shall mean the Surviving Person in a Business
Combination; PROVIDED, HOWEVER, that, if such Surviving Person is a direct or
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
"PURCHASE PRICE" with respect to each Right shall mean $70, as such
amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
"RECORD DATE" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"REDEMPTION DATE" shall have the meaning set forth in Section 24(a).
"REDEMPTION PRICE" with respect to each Right shall mean $.001, as such
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
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"REGISTERED CAPITAL SHARES" shall mean Capital Shares which are, as of
the date of consummation of a Business Combination, and have continuously been
for the 12 months immediately preceding such date, registered under Section 12
of the Exchange Act.
"RIGHT CERTIFICATE" shall mean a certificate evidencing a Right in
substantially the form attached as EXHIBIT A.
"RIGHTS" shall mean the rights to purchase shares of Common Stock (or
other securities) as provided in this Rights Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided.
"SUBSIDIARY" 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 such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"SURVIVING PERSON" shall mean (1) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11 (c) (I)
(i) or 11 (c) (I) (ii) or (2) the Person to which the Major Part of the assets
of the Company and its Subsidiaries is sold, leased, exchanged or otherwise
transferred or disposed of in a transaction specified in Section 11(c)(I)(iii);
PROVIDED, HOWEVER, that, if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11 (c) (I) (iii) to
more than one Person, the "Surviving Person" in such case shall mean the Person
that acquired assets of the Company and/or its subsidiaries with the greatest
fair market value in such transaction or transactions.
"TRADING DAY" when used with reference to the Market Value of a
security, shall mean a day on which the principal national securities exchange
(or principal recognized foreign stock exchange, as the case may be) on which
such securities are listed or admitted to trading is open for the transaction of
business or, if such securities in question are not listed or admitted to
trading on any national securities exchange (or recognized foreign stock
exchange, as the case may be), a Business Day.
"TRIGGER EVENT" shall mean either (i) an adjustment to the Purchase
Price described in the first sentence of Section 11(a) upon a Person becoming an
Acquiring Person following a Distribution Date (or the occurrence of a
Distribution Date following the time a Person becomes an Acquiring Person) or
(ii) a Business Combination.
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SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents) upon
ten (10) days' prior written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-Rights Agent. In the event the Company appoints one or
more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agents shall be as the Company shall determine.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES. (a) One Right shall
be associated with each Capital Share outstanding on the Record Date, each
additional Capital Share that shall become outstanding between the Record Date
and the earliest of a Distribution Date, the Redemption Date or the Expiration
Date and each additional Capital Share with which Rights are issued after a
Distribution Date but prior to the earlier of the Redemption Date or the
Expiration Date as provided in Section 23, in each case subject to the
provisions of Section 12.
(b) Until the earlier of (i) the Close of Business on the tenth Business
Day after the Company learns that a Person has become an Acquiring Person or
(ii) the Close of Business on such date, if any, as may be designated by the
Board of Directors of the Company following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries, or any Person holding Capital
Shares for or pursuant to the terms of any such employee benefit plan) for
outstanding Capital Shares, if upon consummation of such tender or exchange
offer (without giving effect to any condition of such tender or exchange offer
that the Rights be redeemed or otherwise rendered inoperative with respect to
such transaction) such Person's Beneficial Ownership of Capital Shares then
outstanding could equal or exceed such Person's Ownership Threshold (the earlier
of such dates being a "Distribution Date"), (x) the Rights will be evidenced by
the certificates for Capital Shares registered in the names of the holders
thereof and not by separate Right Certificates and (y) the Rights, including the
right to receive Right Certificates, will be transferable only in connection
with the transfer of Capital Shares. The Company shall give the Rights Agent
prompt written notice of the Distribution Date. As soon as practicable after a
Distribution Date and receipt of written notice of the Distribution Date from
the Company, the Rights Agent will, at the Company's expense, send, by
first-class, postage-prepaid mail, to each record holder of Capital Shares as of
the Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing the Rights to which such holder is
entitled. Notwithstanding the foregoing, the Board of Directors, by resolution
adopted prior to the Distribution Date specified in clause (i) or (ii) above,
may determine to defer the Distribution Date beyond the date specified in such
clause (i) or (ii) to a specified or unspecified later date as it deems
appropriate in its sole and absolute discretion. As of and after a Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
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(c) With respect to any certificate for Capital Shares, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
the Rights associated with the Capital Shares represented by any such
certificate shall be evidenced by such certificate alone, the registered holders
of the Capital Shares shall also be the registered holders of the associated
Rights and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Capital Shares
represented thereby. On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights Plan in substantially the
form attached hereto as EXHIBIT B, to each holder of record of Common Stock as
of the Close of Business on the Record Date at the address of such holder shown
on the records of the Company.
(d) Certificates issued for Capital Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Capital
Shares), but prior to the earliest of a Distribution Date, the Redemption Date
or the Expiration Date, may have 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 dated as of July 29,
1996, as it may be amended from time to time (the "Rights Agreement"),
between Healthsource, Inc. (the "Company") and the Rights Agent, the
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Rights beneficially owned by
Acquiring Persons or their Affiliates or Associates (as such terms are
defined in the Rights Agreement) and by any subsequent holder of such
Rights are null and void and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall not affect
the enforceability of any part of this Rights Agreement or the rights of any
holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the reverse
side thereof) shall be in substantially the form set forth as EXHIBIT A 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 Rights 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. The Right Certificates
shall be in a machine printable format and in a form reasonably satisfactory to
the Rights Agent. Subject to the provisions of Sections 7, 11 and 23, the Right
Certificates, whenever issued, shall be dated as of the Distribution Date, and
on their face shall entitle the holders thereof to purchase such number of
shares of Common Stock as shall be set forth therein for the Purchase Price set
forth therein, subject to adjustment from time to time as herein provided.
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SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by the President and
Chief Executive Officer, the Chief Operating Officer, the Executive Vice
President or the Chief Financial Officer of the Company, either manually or by
facsimile signature, and have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid or
obligatory for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such an officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nevertheless
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 an 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 execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of execution of
this Rights Agreement any such person was not such an officer of the Company.
(b) Following a Distribution Date, the Rights Agent will keep or cause
to be kept, at its office in New York, New York, 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 by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES;
UNCERTIFICATED RIGHTS. (a) Subject to the provisions of Sections 7(e) and 15, at
any time after a Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date, any Right Certificate
or Right Certificates may be transferred, split-up, combined or exchanged for
another Right Certificate or Right Certificates representing, in the aggregate,
the same number of Rights as the Right Certificate or Right Certificates
surrendered then represented. Any registered holder desiring to transfer,
split-up, combine or exchange any Right Certificate 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
office of the Rights Agent; PROVIDED, HOWEVER, that neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any Right Certificate surrendered for transfer until the registered
holder shall have completed and signed the certification contained in the form
of assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Sections
7(e) and 15, 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, by the holder of a Right Certificate, of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid 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 a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for uncertificated
Rights in addition to or in place of Rights evidenced by Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS. (a) Subject to
Section 7(e) and except as otherwise provided in Section 11 and elsewhere
herein, each Right shall entitle the registered holder thereof, upon exercise
thereof as provided herein, to purchase for the Purchase Price, at any time
after a Distribution Date and at or prior to the earlier of (i) the Close of
Business on August 12, 2006 (the Close of Business on such date being the
"Expiration Date") or (ii) the Redemption Date, one share of Common Stock,
subject to adjustment from time to time as provided in Sections 11, 12 and 26.
(b) 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 a Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase and certification on the
reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent in New York, New York, together with payment of the Purchase Price
for each share of Common Stock as to which the Rights are exercised, at or prior
to the Expiration Date.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and certification duly executed,
accompanied by payment of the Purchase Price for the shares of Common Stock to
be purchased together with an amount equal to any applicable transfer tax, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) either (A) promptly requisition from any transfer agent of the
Common Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Common Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the shares of
Common Stock with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of shares of Common Stock to be purchased (in which case certificates for
the shares of Common Stock to be represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with all such requests, (ii) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be
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<PAGE> 14
designated by such holder and (iii) when appropriate, after receipt promptly
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 fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
any Rights that are at any time beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person shall be null and void and
nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right. The Company shall have the right (but shall have no
obligation) to appropriately legend any certificate representing the
corresponding Common Stock as to the nullity of such Rights pursuant to this
Section 7(e).
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
any Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date or the date of an event of
the type described in the first sentence of Section 11(a) (as the case may be),
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act, on an appropriate form, with respect to the
shares of Common Stock purchasable upon exercise of the Rights and permit such
registration statement to become effective; PROVIDED, HOWEVER, that no such
suspension shall remain effective after, and the Rights shall without any
further action by the Company or any other Person become exercisable immediately
upon, the effectiveness of such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification under the
blue sky or securities laws of such jurisdiction shall not have been obtained or
the exercise of the Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered or presented for the purpose of exercise, transfer,
split-up, combination or exchange shall, and any Right Certificate representing
Rights that have become null and void and nontransferable pursuant to Section 7
(e) surrendered or presented for any purpose shall, if
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<PAGE> 15
surrendered or presented to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered or
presented to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Right Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Right Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Common Stock free from preemptive rights or any
right of first refusal, a number of shares of Common Stock sufficient to permit
the exercise in full of all outstanding Rights.
(b) In the event that there shall not be a sufficient number of shares
of Common Stock authorized but unissued to permit the exercise or exchange of
Rights in accordance with Section 11, the Company covenants and agrees that it
will take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon the exercise or exchange of Rights pursuant to
Section 11; PROVIDED, HOWEVER, that if the Company is unable to cause the
authorization of additional shares of Common Stock, then the Company shall, or
in lieu of seeking any such authorization, the Company may, to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect prior to the Distribution Date to which it is a party, (A) upon surrender
of a Right, pay cash equal to the Purchase Price in lieu of issuing shares
Common Stock and requiring payment therefor, (B) upon due exercise of a Right
and payment of the Purchase Price for each share of Common Stock as to which
such Right is exercised, issue equity securities having a value equal to the
value of the shares of Common Stock which otherwise would have been issuable
pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company or (C) upon due exercise of a Right and payment of the Purchase Price
for each share of Common Stock as to which such Right is exercised, distribute a
combination of shares of Common Stock, cash and/or other equity and/or debt
securities having an aggregate value equal to the value of the shares of Common
Stock which otherwise would have been issuable pursuant to Section 11, which
value shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company. To the extent that any legal
or contractual restrictions (pursuant to agreements or instruments in effect
prior to the Distribution Date to which it is party) prevent the Company from
paying the full amount payable in accordance with the foregoing sentence, the
Company shall pay to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual restrictions until
such payments have been paid in full.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Common Stock delivered upon
exercise or exchange of Rights shall, at the time of delivery of the
certificates for such shares of Common Stock (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
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(d) So long as the shares of Common Stock issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangable, all shares of Common
Stock reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all Federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of Right Certificates or of
any shares of Common Stock or Capital Shares or other securities upon the
exercise or exchange of the Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or in respect of the
issuance or delivery of certificates for the shares of Common Stock or Capital
Shares or other securities, as the case may be, in a name other than that of,
the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or exchange or to issue or deliver any certificates for shares of
Common Stock or Capital Shares or other securities, as the case may be, upon the
exercise or exchange 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 satisfaction that
no such tax is due.
SECTION 10. RECORD DATE FOR SHARES UPON EXERCISE OF RIGHTS. Each Person
in whose name any certificate for shares of Common Stock or Capital Shares or
other securities is issued upon the exercise or exchange of Rights shall for all
purposes be deemed to have become the holder of record of the shares of Common
Stock or Capital Shares or other securities, as the case may be, represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of any
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
transfer books of the Company for the shares of Common Stock or Capital Shares
or other securities, as the case may be, are closed, such Person shall be deemed
to have become the record holder of such shares of Common Stock or Capital
Shares or other securities, as the case may be, on, and such certificate shall
be dated, the next succeeding Business Day on which the transfer books of the
Company for the shares of Common Stock or Capital Shares or other securities, as
the case may be, are open.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS. (a) Upon a Person becoming
an Acquiring Person following a Distribution Date (or the occurrence of a
Distribution Date following the time a Person becomes an Acquiring Person),
proper provision shall be made so that each holder of a Right, except as
provided in Section 7(e), shall thereafter have a right to receive, upon
exercise thereof for the Purchase Price in accordance with the terms of this
Rights Agreement, such number of shares of Common Stock as shall equal the
result obtained by multiplying the Purchase Price by a fraction, the numerator
of which is the number of shares of Common Stock for which a Right is then
exercisable and the denominator of which is 50% of the Market Value
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<PAGE> 17
of the Common Stock on the date on which a Person becomes an Acquiring Person.
As soon as practicable after such date, the Company covenants and agrees to use
its best efforts to:
(I) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the shares of
Common Stock purchasable upon exercise of the Rights;
(II) cause such registration statement to become effective as
soon as practicable after such filing;
(III) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities
Act) until the Expiration Date; and
(IV) qualify or register the shares of Common Stock purchasable
upon exercise of the Rights under the blue sky or securities laws of
such jurisdictions as may be necessary or appropriate.
(b) (I) The Board of Directors of the Company may, at its option, at any
time after a Person becomes an Acquiring Person following a Distribution Date
(or the occurrence of a Distribution Date following the time a Person becomes an
Acquiring Person), mandatorily exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that shall have become null
and void and nontransferable pursuant to the provisions of Section 7(e)) for
consideration per Right consisting of the consideration issuable pursuant to
clause (A) of Section 9(b) or one-half of the securities (or other
consideration) that would be issuable at such time upon the exercise of one
Right in accordance with Section 11(a) pursuant to clauses (B) and (C) of
Section 9(b) (the consideration issuable per Right pursuant to this Section
11(b)(I) being the "Exchange Consideration"). If the Board of Directors of the
Company elects to exchange all the Rights for Exchange Consideration pursuant to
this Section 11(b)(I) prior to the physical distribution of the Rights
Certificates, the Company may distribute the Exchange Consideration in lieu of
distributing Right Certificates, in which case for purposes of this Rights
Agreement holders of Rights shall be deemed to have simultaneously received and
surrendered for exchange Right Certificates on the date of such distribution.
(II) Any action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 11(b)(I) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(c)(I). 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 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
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<PAGE> 18
state the method by which the exchange of the Rights for the Exchange
Consideration 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 shall have
become null and void and nontransferable pursuant to the provisions of Section
7(e)) held by each holder of Rights.
(c) (I) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (i), (ii) or
(iii) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and into,
any Acquiring Person or any Affiliate or Associate of an Acquiring
Person;
(ii) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Capital Shares shall be
changed into or exchanged for capital stock or other securities of the
Company or of any Acquiring Person or Affiliate or Associate of an
Acquiring Person or cash or any other property; or
(iii) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell,
lease, exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any Acquiring Person or any Affiliate
or Associate of an Acquiring Person,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has
Registered Capital Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement,
such number of Registered Capital Shares of such Principal Party, free
and clear of all liens, encumbrances or other adverse claims, as shall
have an aggregate Market Value equal to the result obtained by
multiplying the Purchase Price by two;
(B) If the Principal Party involved in such Business Combination
does not have Registered Capital Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for
the Purchase Price in accordance with the terms of this Rights
Agreement, at the election of the holder of such Right at the time of
the exercise thereof, any of:
(1) such number of Capital Shares of the Surviving Person in
such Business Combination as shall have an aggregate Book Value
immediately after
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<PAGE> 19
giving effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two;
(2) such number of Capital Shares of the Principal Party in
such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an
aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by multiplying the
Purchase Price by two; or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Capital Shares
outstanding, such number of Registered Capital Shares of whichever
of such Affiliates of the Principal Party has Registered Capital
Shares with the greatest aggregate Market Value on the date of
consummation of such Business Combination as shall have an aggregate
Market Value on the date of such Business Combination equal to the
result obtained by multiplying the Purchase Price by two.
(II) The Company shall not consummate any Business Combination unless
each issuer of Capital Shares for which Rights may be exercised, as set forth in
this Section 11(c), shall have sufficient authorized Capital Shares that have
not been issued or reserved for issuance (and which shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Capital Shares of
such issuer purchasable upon exercise of the Rights, shall be effective
under the Securities Act;
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the
obligation of such issuer to issue Capital Shares upon the exercise
of Rights in accordance with the terms set forth in Sections
11(c)(I) and 11(c) (III)) and further providing that such issuer, at
its own expense, will use its best efforts to:
(1) cause a registration statement under the Securities
Act on an appropriate form, with respect to the Rights and the
Capital Shares of such issuer purchasable upon exercise of the
Rights, to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
Expiration Date;
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<PAGE> 20
(2) qualify or register the Rights and the Capital Shares
of such issuer purchasable upon exercise of the Rights under
the blue sky or securities laws of such jurisdictions as may
be necessary or appropriate; and
(3) list the Rights and the Capital Shares of such issuer
purchasable upon exercise of the Rights on each national
securities exchange on which the Capital Shares were listed
prior to the consummation of the Business Combination or, if
the Capital Shares were not listed on a national securities
exchange prior to the consummation of the Business
Combination, on a national securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
(C) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number
of Capital Shares of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business
Combination.
(III) After consummation of any Business Combination and subject to the
provisions of Section 11(c)(II), (i) each issuer of Capital Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (ii) the term
"Company" shall thereafter be deemed to refer to such issuer, (iii) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Capital Shares thereafter deliverable upon
the exercise of the Rights, and (iv) the number of Capital Shares of each such
issuer thereafter 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 of Sections 11 and 12, and the provisions of
Section 7, 9 and 10 with respect to the shares of Common Stock issuable upon
exercise of the Rights shall apply, as nearly as reasonably may be, on like
terms to any such Capital Shares.
SECTION 12. CERTAIN ADJUSTMENTS. (a) To preserve the actual or potential
economic value of the Rights, if at any time after the date of this Rights
Agreement there shall be any change in the Common Stock, whether by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options (other than pursuant to compensatory option plans and agreements) or
warrants to holders of Common Stock, as the case may be (other than distribution
of the Rights or ordinary quarterly cash dividends) or otherwise, then, in each
such event the Board of Directors of the Company shall
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make such appropriate adjustments in the number of shares of Common Stock (or
the number and kind of other securities) issuable upon exercise of each Right,
the Purchase Price and Redemption Price in effect at such time and the number of
Rights outstanding at such time such that following such adjustment such event
shall not have had the effect of materially and adversely reducing or limiting
the benefits the holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
securities other than shares of Common Stock, thereafter the number of such
securities 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 of Sections 11 and 12, and the provisions of
Sections 7, 9 and 10 with respect to the shares of Common Stock issuable upon
exercise of the Rights shall apply, as nearly as reasonably may be, on like
term, to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Common Stock or other securities relating to a
Right shall evidence the right to purchase, for the Purchase Price, the adjusted
number and kind of securities purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Common Stock or number or kind of other securities
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a) requires
that an adjustment 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 issuing to
the holder of any Right exercised after such record date the shares of Common
Stock and/or other securities, if any, issuable upon such exercise over and
above the shares of Common Stock and/or other securities, if any, issuable
before giving effect to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
SECTION 13. CERTIFICATE OF ADJUSTMENT. Whenever an adjustment is made as
provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, and (b) promptly file with the Rights Agent and
with each transfer agent for the shares of Common Stock issuable upon exercise
of the Rights a copy of such certificate. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained.
SECTION 14. ADDITIONAL COVENANTS. (a) Notwithstanding any other
provision of this Rights Agreement, no adjustment to the number of shares of
Common Stock or other securities for which a Right is exercisable or the number
of Rights outstanding or associated with each
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<PAGE> 22
Capital Share or any similar or other adjustment shall be made or be effective
following a Distribution Date if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Sections 11 and 12, unless the terms of this Rights Agreement are amended so as
to preserve such benefits.
(b) The Company covenants and agrees that, after a Distribution Date,
except as permitted by Section 26, it will not take (or permit any Subsidiary of
the Company to take) any action if at the time such action is taken it is
intended or reasonably foreseeable that such action will reduce or otherwise
limit the benefits the holders of the Rights would have had absent such action,
including, without limitation, the benefits under Sections 11 and 12. The
Company shall not consummate any Business Combination if any issuer of Capital
Shares for which Rights may be exercised after such Business Combination in
accordance with Section 11(c) shall have taken any action that reduces or
otherwise limits the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12.
SECTION 15. FRACTIONAL SHARES. (a) The Company may, but shall not be
required to, issue fractions of shares of Common Stock upon exchange of Rights
pursuant to Section 11(b), or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company may pay to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current Market
Value of one share of Common Stock as of the date on which a Person became an
Acquiring Person.
(b) The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional shares upon exercise of a Right
except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION. (a) All rights of action in respect of
this Rights Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Capital Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Capital Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Capital Shares) may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights 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 Rights Agreement and shall be entitled to
specific performance of the obligations of any Person under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
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SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES. (a)
Prior to a Distribution Date, the Rights will be transferable only in connection
with the transfer of the Capital Shares.
(b) After a Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the 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 a Right Certificate (or, prior to a Distribution Date, the associated
Capital Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated certificate for Capital
Shares 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.
(d) Notwithstanding anything in this Rights 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 Rights Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; PROVIDED that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed, for any purpose, the holder of the shares of Common
Stock or of 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, including, without limitation, 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, or to receive
dividends or other distributions 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 19. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent such compensation for all services rendered by it hereunder
as agreed in writing between the Company and the Rights Agent and from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and expenses and other disbursements incurred in the administration and
execution of this Rights Agreement and the exercise and performance
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<PAGE> 24
of its duties hereunder. The provisions of this Section 19(a) shall survive the
expiration of the Rights and the termination of this Rights Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Capital 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 and executed by
the proper Person or Persons. In no event shall the Rights Agent be responsible
or liable to anyone for consequential damages, lost profits, interest or other
special or consequential damages, even if informed of the possibility thereof.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF RIGHTS AGENT. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to all or substantially
all the stock transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; PROVIDED that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 22. In case, at the time such successor Rights Agent shall succeed to
the agency created by this Rights 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations expressly imposed by this Rights Agreement upon the
following terms and conditions, and no implied duties or obligations shall be
read into this Rights Agreement against the Rights Agent, by all of which the
Company and the holders of Right Certificates (or, prior to a Distribution Date,
of the Capital Shares), by their acceptance thereof, shall be bound:
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<PAGE> 25
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel for the Company), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from 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 or reasonably
believed by the Rights Agent to be signed by any one of the Chief Executive
Officer, the President, the Chief Operating Officer, the Executive Vice
President or the Chief Financial Officer 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 Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Agreement or in the
Right Certificates (except as to 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.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice to the Rights Agent of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or Capital Shares to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any shares of Common Stock or Capital
Shares will, when so issued, be validly authorized and issued, fully paid and
nonassessable, nor shall the Rights Agent be responsible for the legality of the
terms hereof in its capacity as an administrative agent.
(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 Rights Agreement.
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, the President, the Chief Operating Officer,
the Executive Vice President or the Chief Financial Officer of the Company, in
connection with its duties and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer 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 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 such
application on or after the date specified in such application (which date shall
not be less than three Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to any 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 the Rights
Agent under this Rights 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
thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including reasonable
fees and expenses of legal counsel) which the Rights Agent may incur resulting
from its actions as Rights Agent pursuant to this Rights Agreement; PROVIDED,
HOWEVER, that the Rights Agent shall not be indemnified or held harmless with
respect to any such loss, liability, damage or expense incurred by the Rights
Agent as a result of, or arising out of, its own gross negligence, bad faith or
willful misconduct. The Rights Agent shall give notice to the Company promptly
upon the assertion of any action, proceeding, suit or claim against the Rights
Agent, giving information as to the nature and basis of the action, proceeding,
suit or claim. The Company shall be entitled to participate at its own expense
in the defense of any such action, proceeding, suit or claim, and, if the
Company so elects, the Company shall assume the defense of any such action,
proceeding, suit or claim. In the event that the Company assumes such defense,
the Company shall not thereafter be liable for the fees and expenses of any
additional counsel retained by the Rights Agent, so long as the Company shall
retain counsel satisfactory to the Rights Agent, in the exercise of its
reasonable
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judgment, to defend such action, proceeding, suit or claim. The Rights Agent
agrees not to settle any litigation in connection with any action, proceeding,
suit or claim with respect to which it may seek indemnification from the Company
without the prior written consent of the Company such consent not to be
unreasonably withheld. The provisions of this Section 21(j) shall survive the
expiration of the Rights and the termination of this Rights Agreement.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested transfer or exercise without first consulting with the Company.
(l) No provision of this Rights Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase (as the case may be) has not been
completed or indicates an affirmative response to clause 1 or 2 thereof, the
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
(n) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Rights Agreement if such
acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of assignment
and the form of election to purchase attached hereto unless the Rights Agent
shall have actual knowledge that, as executed, such certification is untrue, or
(ii) the non-execution of such certification including, without limitation, any
refusal to honor any otherwise permissible assignment or election by reason of
such non-execution.
(o) The Company agrees to give the Rights Agent prompt written notice of
any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
SECTION 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days notice in writing mailed to the Company and to each
transfer agent of the Capital Shares by registered or certified mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Capital Shares by registered or
certified 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
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notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (or, prior to
a Distribution Date, of the Capital Shares) (who shall, with such notice, submit
his Right Certificate or, prior to the Distribution Date, the certificate
representing his Capital Shares, for inspection by the Company), then the Rights
Agent or registered holder of any Right Certificate (or, prior to a Distribution
Date, of the Capital Shares) may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has (alone or together with
its affiliates) at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000; PROVIDED that the principal
transfer agent for the Capital Shares shall in any event be qualified to be the
Rights Agent. 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 Capital Shares and mail a notice thereof in writing to the registered
holders of the Right Certificates (or, prior to a Distribution Date, of the
Capital Shares). Failure to give any notice provided for in this Section 22,
however, or any defect therein shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights 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 made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of
Capital Shares following a Distribution Date and prior to the Expiration Date,
the Company (a) shall, with respect to Capital Shares so issued or sold pursuant
to the exercise of stock options granted prior to the Distribution Date under
any employee plan or arrangement, and (b) may, in any other case, if deemed
necessary or appropriate by its Board of Directors, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; PROVIDED, HOWEVER, that (i) no such Right 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 Right Certificate would be issued, and
(ii) no such Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 24. REDEMPTION AND TERMINATION. (a) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of (i) a
Trigger Event (or, if later, the Close of Business on the tenth Business Day
after the Company learns that any Person has become an Acquiring Person) and
(ii) the Expiration Date, order the redemption of all, but not fewer than
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all, the then outstanding Rights at the Redemption Price (the date of such
redemption being the "Redemption Date"), and the Company, at its option, may pay
the Redemption Price either in cash or Capital Shares or other securities of the
Company deemed by the Board of Directors of the Company, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption Price.
Notwithstanding anything contained herein to the contrary, the Rights shall not
be exercisable pursuant to Section 11(a) so long as the Rights are redeemable.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the transfer agent for the
Capital Shares. Each such notice of redemption will state the method by which
payment of the Redemption Price will be made. The notice, if mailed in the
manner herein provided, shall be conclusively presumed to have been duly given,
whether or not the holder of Rights receives such notice. In any case, failure
to give such notice by mail, or any defect in the notice, to any particular
holder of Rights shall not affect the sufficiency of the notice to other holders
of Rights.
(c) Notwithstanding the provisions of Section 23(a) hereof, in the event
that a majority of the Board of Directors of the Company is elected by
stockholder action by written consent, or is comprised of persons elected at a
meeting of stockholders who were not nominated by the Board of Directors of the
Company in office immediately prior to such meeting, then for a period of one
hundred and eighty (180) days following the effectiveness of such election the
Rights shall not be redeemed if such redemption is reasonably likely to have the
purpose or effect of allowing any Person to become an Acquiring Person or
otherwise facilitating the occurrence of a Trigger Event or a transaction with
an Acquiring Person.
SECTION 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of a Right Certificate
(or, prior to the Distribution Date, of the Capital Shares) 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:
Healthsource, Inc.
Two College Park Drive
Hooksett, N.H. 03106
Attention: Norman C. Payson, M.D.
President and Chief Executive Officer
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Capital Shares) to or on
the Rights Agent shall be sufficiently
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given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
The Bank of New York
12th Floor, West
101 Barclay Street
New York, New York 10286
Attention: Kathleen Flaherty
Assistant Treasurer
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Capital Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Capital Shares.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. At any time prior to a
Distribution Date and subject to the last sentence of this Section 26, the
Company in its sole and absolute discretion may, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Rights
Agreement (including, without limitation, the date on which the Distribution
Date shall occur or the time during which the Rights may be redeemed pursuant to
Section 24) without the approval of any holder of the Rights. From and after a
Distribution Date and subject to applicable law, the Company may, and the Rights
Agent shall if the Company so directs, amend this Rights Agreement without the
approval of any holders of Right Certificates (i) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision of this Rights Agreement or (ii) to make
any other provisions in regard to matters or questions arising hereunder which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery
of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 26 which
alters the Rights Agent's rights or duties. In addition, notwithstanding
anything to the contrary contained in this Rights Agreement, no supplement or
amendment to this Rights Agreement shall be made (i) at any time during which
redemption of the Rights is restricted pursuant to Section 24(c) if such
supplement or amendment would not be permissible under clause (i) or (ii) of the
second sentence of this Section 26 or (ii) which provides for an earlier
Expiration Date.
SECTION 27. SUCCESSORS. All the covenants and provisions of this Rights
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.
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SECTION 28. BENEFITS OF RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY
THE BOARD OF DIRECTORS, ETC. (a) Nothing in this Rights Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Capital Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Capital
Shares).
(b) Except as explicitly otherwise provided in this Rights Agreement,
the Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and a determination of
whether there is an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Capital Shares reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the law
of the State of New Hampshire and for all purposes shall be governed by and
construed in accordance with the law of such State applicable to contracts to be
made and performed entirely within such State, provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 31. COUNTERPARTS; EFFECTIVENESS. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be
29
<PAGE> 32
an original, and all such counterparts shall together constitute but one and the
same instrument. This Rights Agreement shall be effective as of the Close of
Business on the date hereof.
SECTION 32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed as of the day and year first above written.
HEALTHSOURCE, INC.
By: /s/ Norman C. Payson, M.D.
---------------------------------------
Norman C. Payson, M.D.
President and Chief Executive Officer
THE BANK OF NEW YORK,
as Rights Agent
By: /s/ Joseph Varca
---------------------------------------
Name: Joseph Varca
Title: Vice President
30
<PAGE> 33
EXHIBIT A
[Form of Right Certificate]
Certificate No. [R]- ___________ Rights
NOT EXERCISABLE AFTER AUGUST 12, 2006, OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.001 PER RIGHT, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND
NONTRANSFERABLE.
Right Certificate
HEALTHSOURCE, 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 July 29, 1996 (the "Rights Agreement"), between
Healthsource, Inc., a New Hampshire corporation (the "Company"), and The Bank of
New York, a New York banking corporation, as Rights Agent (the "Rights Agent"),
unless the Rights evidenced hereby shall have been previously redeemed by the
Company, to purchase from the Company at any time after the Distribution Date
(as defined in the Rights Agreement) and prior to 5:00 p.m., New York City time,
on August 12, 2006 (the "Expiration Date"), at the office of The Bank of New
York, or its successors as Rights Agent, in New York, New York, one fully paid,
nonassessable share of Common Stock, par value $.10 per share, of the Company,
at a purchase price per share equal to $70 (the "Purchase Price") payable in
cash, upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of July 29, 1996. As provided in the Rights Agreement,
the Purchase Price and the number and kind of shares which may be purchased upon
the exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined
<PAGE> 34
in the Rights Agreement), such Rights shall be null and void and nontransferable
and the holder of any such Right (including any purported transferee or
subsequent holder) shall not have any right to exercise or transfer any such
Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement 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 above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stock transfer or corporate trust office of the Rights Agent,
may be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number and kind of shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall entitle 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 and certain
limitations specified therein, the Rights evidenced by this Right Certificate
may be redeemed by the Company at its option at a redemption price (in cash or
shares of Common Stock or other securities of the Company deemed by the Board of
Directors to be at least equivalent in value) of $.001 per Right (which amount
shall be subject to adjustment as provided in the Rights Agreement) at any time
prior to the earlier of (i) a Trigger Event (or, if later, the Close of Business
on the tenth Business Day after the Company learns that any Person has become an
Acquiring Person) and (ii) the Expiration Date.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company, including, without limitation, any right to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
accordance with the provisions of the Rights Agreement.
2
<PAGE> 35
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of: HEALTHSOURCE, INC.
_________________, ____ By:
---------------------------------------
Norman C. Payson, M.D.
President and Chief Executive Officer
Attest:
- --------------------------------
Name:
Title:
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By:
-----------------------------
Authorized Signatory
3
<PAGE> 36
[On Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and
transfers unto
-----------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned, or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated: ______________, 19__
-----------------------------------------
Signature
4
<PAGE> 37
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
5
<PAGE> 38
(On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to purchase
the shares of Common Stock (or other shares) issuable upon the exercise
of such Rights and requests that certificates for such 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
Signature Guaranteed:
6
<PAGE> 39
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated: ____________________, 19__
-----------------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
7
<PAGE> 40
EXHIBIT B
SUMMARY OF RIGHTS PLAN
The following represents a summary of the most significant terms and
provisions of the Healthsource, Inc. Stockholder Rights Plan and is qualified in
its entirety by reference to the terms and provisions of the Rights Agreement
dated as of July 29, 1996 between Healthsource, Inc. and The Bank of New York,
as Rights Agent, a copy of which may be obtained by written request to
Healthsource, Inc., Two College Park Drive, Hooksett, New Hampshire 03106, tel.
(603) 268-7000, Attn: Chief Financial Officer.
1. EFFECTIVENESS. The Rights Plan shall be effective for all outstanding
shares of Common Stock on the record date for the distribution of Rights and for
all shares of Common Stock issued after such date and, subject to the next
sentence, prior to the earliest of the Distribution Date (as defined), the
redemption of the Rights or the Expiration Date (as defined). Rights may be
issued with respect to shares of Common Stock issued after the Distribution Date
only in limited circumstances.
2. RIGHT CERTIFICATES. Prior to the Distribution Date, the Rights will
be represented by certificates for shares of Common Stock. Separate Right
Certificates will be distributed to stockholders as soon as practicable after
the Distribution Date.
3. TERM. The Rights will expire on August 12, 2006 (the "Expiration
Date") unless earlier redeemed or canceled by the Company as provided below.
4. EXERCISABILITY. Initially, the Rights will not be exercisable. The
Rights will become exercisable (except for Rights held by an Acquiring Person
(as defined below) and its affiliates and associates) upon the earlier of (i) 10
business days after the date on which the Company learns that a person or group
(including any affiliate or associate of such person or group) has acquired, or
obtained the right to acquire, beneficial ownership of more than 20% of the
Common Stock at any time outstanding (the "Ownership Threshold") (such person or
group being called an "Acquiring Person") and (ii) such date, if any, as may be
designated by the Board of Directors of the Company following the commencement
of, or first public disclosure of an intention to commence, a tender or exchange
offer for outstanding Common Stock that could result in such person or group
becoming the beneficial owner of more than the Ownership Threshold of the
outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"). The Board of Directors has the right to defer the
Distribution Date to a specified or unspecified later date in its sole
discretion. Each Right shall be exercisable for one share of Common Stock (as
described below), subject to adjustment. The Purchase Price with respect to each
Right is $70 and will be subject to adjustment as provided in the Rights
Agreement.
<PAGE> 41
5. DETACHABILITY. Prior to the Distribution Date, the Rights shall be
transferable only with the related Common Stock certificates and shall
automatically be transferred with such certificates. After the Distribution
Date, the Rights shall be separately transferable and the Company will provide
Right Certificates to all holders of Common Stock.
6. DILUTION ADJUSTMENTS. The amount of Common Stock issuable upon
exercise of the Rights is subject to adjustment by the Board of Directors of the
Company in the event of any change in the Common Stock, whether by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of assets, evidences of indebtedness or subscription rights, options or
warrants to holders of Common Stock or otherwise.
7. THE FLIP-IN PROVISION. Subject to paragraph 10 below, upon a person
becoming an Acquiring Person following a Distribution Date (or the occurrence of
a Distribution Date following the time a person becomes an Acquiring Person) (a
"Trigger Event"), proper provision shall be made so that the holder of each
Right will thereafter have the right to receive, upon exercise thereof, for the
Purchase Price, that number of shares of Common Stock equal to the number of
shares of Common Stock that at the time of such transaction would have a market
value of twice the Purchase Price. Any Rights that are or were beneficially
owned by an Acquiring Person or any affiliate or associate shall not become
exercisable and shall become null and void and non-transferable.
8. THE FLIP-OVER PROVISION. In the event the Company is acquired in a
merger or other business combination by an Acquiring Person that is a publicly
traded corporation or 50% or more of the Company's assets or assets representing
50% or more of the Company's earning power are sold, leased, exchanged or
otherwise transferred (in one or more transactions) to an Acquiring Person that
is a publicly traded corporation, each Right will entitle its holder to
purchase, for the Purchase Price, that number of common shares of such
corporation which at the time of the transaction would have a market value of
twice the Purchase Price. In the event the Company is acquired in a merger or
other business combination by an Acquiring Person that is not a publicly traded
entity or 50% or more of the Company's assets or assets representing 50% or more
of the earning power of the Company are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person that is not a
publicly traded entity, each Right will entitle its holder to purchase, for the
Purchase Price, at such holder's option, (i) that number of shares of the
surviving corporation in the transaction with such entity (or, at such holder's
option, of the surviving corporation in such acquisition, which could be the
Company) which at the time of the transaction would have a book value of twice
the Purchase Price, (ii) that number of shares of such entity that at the time
of the transaction would have a book value of twice the Purchase Price or (iii)
if such entity has an affiliate which has publicly traded common shares, that
number of common shares of such affiliate which at the time of the transaction
would have a market value of twice the Purchase Price. The "flip-over" provision
only applies to a merger or similar business combination with an Acquiring
Person, and it does not apply to a merger or business combination with any party
that has not triggered the "flip-in" provision.
2
<PAGE> 42
9. REDEMPTION. The Rights are redeemable by the Board of Directors at a
redemption price of $.001 per Right (the "Redemption Price") any time prior to
the earlier of (i) a Trigger Event (or, if later, the close of business on the
tenth business day after the Company learns that any person has become an
Acquiring Person) and (ii) the Expiration Date. In the event that a majority of
the Board of Directors is replaced by individuals who were not nominated by the
Board of Directors, then for a period of 180 days following such action, the
Rights may not be redeemed if the redemption would facilitate the occurrence of
a Trigger Event. Immediately upon the action of the Board electing to redeem the
Rights, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
10. EXCHANGE. After a Trigger Event, the Board of Directors may elect to
exchange each Right (other than Rights owned by an Acquiring Person) for
consideration per Right consisting of one-half of the securities that would be
issuable at such time upon the exercise of one Right pursuant to the terms of
the Rights Agreement (or equivalent value in cash, shares of Common Stock or
other securities).
11. AMENDMENT. At any time prior to a Distribution Date, the Company
may, without the approval of any holder of the Rights, supplement or amend any
provision of the Rights Agreement (including the date on which the Distribution
Date shall occur).
12. VOTING. 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.
3
