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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE
SECURITIES EXCHANGE ACT OF 1934
Healthcare Recoveries, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 61-1141758
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(State of Incorporation or Organization) (IRS Employer Identification No.)
1400 Watterson Tower
Louisville, Kentucky 40218
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(Address of Principal Executive Offices) (Zip Code)
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If this form relates to the If this form relates to the registration
registration of a class of securities of a class of securities pursuant to Section
pursuant to Section 12(b) of the Exchange 12(g) of the Exchange Act and is effective
Act and is effective pursuant to General pursuant to General Instruction A.(d), please
Instruction A.(c), please check the check the following box. [X]
following box. [ ]
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Securities Act registration statement file number to which this form relates:
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(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class to Name of Each Exchange on Which
be so Registered Each Class is to be Registered
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None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On February 12, 1999, the Board of Directors of Healthcare Recoveries,
Inc. (the "Company") authorized the issuance of one right (a "Right") with
respect to each outstanding share of common stock, par value $0.001 per share
("Common Stock"), of the Company as of the close of business on March 1, 1999.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") dated February 12, 1999, between the Company and National
City Bank (the "Rights Agent").
DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to
certificates of outstanding shares of Common Stock and no separate Right
Certificate will be distributed. The Rights will become exercisable and separate
from the shares of Common Stock upon the earlier of (i) ten days after the date
(the "Stock Acquisition Date") of a public announcement that a person or group
of affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding Common Stock of the Company (such person or group being
hereinafter referred to as an "Acquiring Person"); or (ii) ten business days (or
such later date as the Board may determine) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in a person or group becoming the beneficial
owner of 20% or more of the outstanding Common Stock (the earlier of such dates
in clauses (i) and (ii) being called the "Distribution Date"). Shares of Common
Stock beneficially owned by the Company or any subsidiary of the Company will
not be considered outstanding for purposes of calculating the percentage
ownership of any person.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced by the certificates for the Common
Stock, (ii) the Rights will be transferred with and only with the Common Stock,
(iii) new Common Stock certificates issued after March 1, 1999, upon transfer or
new issuance of the Common Stock will contain a notation incorporating the
Rights Agreement by reference, and (iv) the surrender for transfer of any
certificates for Common Stock outstanding as of March 1, 1999, even without such
notation, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. When they
become exercisable, each Right initially entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, $.001 par value per share ("Preferred Stock"), of
the Company at a price of $65.00 per one one-hundredth of a share of Preferred
Stock
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(the "Purchase Price"), subject to adjustment. The Rights will expire on March
1, 2009 (the "Final Expiration Date"), unless the Final Expiration Date is
extended or the Rights are earlier redeemed or exchanged by the Company as
described below.
If a Person were to become an Acquiring Person, each Right then
outstanding (other than Rights beneficially owned by the Acquiring Person which
would become null and void) would become a right to buy for the Purchase Price
that number of shares of Common Stock that at the time of such acquisition would
have a market value of two times the Purchase Price. If, however, the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an Acquiring Person, has become such inadvertently, and such Person
divests a sufficient number of shares of Common Stock by such deadline as the
Board of Directors shall set, then such Person shall not be deemed to be an
Acquiring Person for any purposes of the Rights Agreement.
If the Company is acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power are
sold other than in the ordinary course of business, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the Purchase Price.
Each of the following persons will not be deemed to be an Acquiring
Person even if they have acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Stock of the Company: (i) the
Company, any subsidiary of the Company, or any employee benefit plan of the
Company or of any subsidiary of the Company and (ii) any person who would
otherwise become an Acquiring Person solely by virtue of a reduction in the
number of outstanding shares of Common Stock unless and until such person shall
become the beneficial owner of any additional shares of Common Stock.
REGISTRATION. The offer and sale of the Preferred Stock, Common Stock
or other securities issuable upon exercise of the Rights will not be registered
with the Securities and Exchange Commission until the Rights become exercisable.
As described above, however, the Rights will not be transferable separately from
the Common Stock until the Distribution Date.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of shares of Preferred
Stock, Common Stock or other securities or property issuable upon exercise of
the Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
EXCHANGE OPTION. At any time after a Person becomes an Acquiring Person
and before the acquisition by a Person of 50% or more of the outstanding Common
Stock of the Company, the Board of Directors may, at its option, issue Common
Stock or common stock equivalents of the Company in mandatory redemption of, or
in exchange for, all or part of the then outstanding exercisable Rights (other
than Rights owned by such Acquiring Person which would become null and void) at
an exchange ratio of one share of Common Stock, or common stock equivalents
equal to one share of Common Stock, per Right, subject to adjustment.
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REDEMPTION OF RIGHTS. At any time prior to the Stock Acquisition Date,
the Board of Directors of the Company may redeem all, but not less than all, of
the then outstanding Rights at a price of $.001 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
NO RIGHTS AS STOCKHOLDER. 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.
AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the
Company without the consent of the holders of the Rights, except that after the
Stock Acquisition Date no such amendment may adversely affect the interests of
holders of the Rights.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B thereto the form
of Right Certificate, is attached as Exhibit 1 to this Form 8-A and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
form of the Rights Agreement and the exhibits thereto. Capitalized terms in this
description are defined in the Rights Agreement.
ITEM 2. EXHIBITS.
Exhibit No. Description of Exhibit
4.1 Rights Agreement dated as of February 12, 1999 between the
Registrant and National City Bank, as Rights Agent, which
includes as EXHIBIT A the Form of Certificate of Designations
of the Preferred Stock, as EXHIBIT B the Form of Right
Certificate and as EXHIBIT C the Summary of Rights to Purchase
Preferred Stock.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
HEALTHCARE RECOVERIES, INC.
Date: February 12, 1999 By: /s/ Patrick B. McGinnis
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Name: Patrick B. McGinnis
Title: Chairman of the Board and
Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
4.1 Rights Agreement dated as of February 12, 1999 between the
Registrant and National City Bank, as Rights Agent, which
includes as EXHIBIT A the Form of Certificate of Designations
of the Preferred Stock, as EXHIBIT B the Form of Right
Certificate and as EXHIBIT C the Summary of Rights to Purchase
Preferred Stock.
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EXHIBIT 4.1
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HEALTHCARE RECOVERIES, INC.
AND
NATIONAL CITY BANK
RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF FEBRUARY 12, 1999
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Table of Contents
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Section Page
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Section 1. Certain Definitions ............................................. 1
Section 2. Appointment of Rights Agent ..................................... 7
Section 3. Issuance of Right Certificates .................................. 8
Section 4. Form of Right Certificates ...................................... 10
Section 5. Countersignature and Registration 12
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates ...... 13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ... 14
Section 8. Cancellation and Destruction of Right Certificates .............. 17
Section 9. Reservation and Availability of Capital Stock ................... 18
Section 10. Preferred Stock Record Date .................................... 20
Section 11. Adjustments to Number and Kind of Shares; Number of Rights or
Purchase Price ............................................................. 21
Section 12. Certification of Adjustments ................................... 35
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power ...................................................................... 36
Section 14. Fractional Rights and Fractional Shares ........................ 42
Section 15. Rights of Action ............................................... 43
Section 16. Agreement of Right Holders ..................................... 44
Section 17. Right Certificate Holder Not Deemed a Stockholder .............. 45
Section 18. Concerning the Rights Agent .................................... 46
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Section 19. Merger or Consolidation or Change of Name of Rights Agent ...... 47
Section 20. Duties of Rights Agent ......................................... 48
Section 21. Change of Rights Agent ......................................... 51
Section 22. Issuance of New Right Certificates ............................. 52
Section 23. Redemption and Termination ..................................... 53
Section 24. Exchange ....................................................... 54
Section 25. Notice of Proposed Actions ..................................... 56
Section 26. Notices ........................................................ 57
Section 27. Supplements and Amendments ..................................... 58
Section 28. Determinations and Actions by the Board ........................ 59
Section 29. Successors ..................................................... 60
Section 30. Benefits of this Agreement ..................................... 60
Section 31. Governing Law .................................................. 60
Section 32. Counterparts ................................................... 60
Section 33. Descriptive Headings ........................................... 60
Section 34. Severability ................................................... 61
Exhibit A -- Form of Certificate of Designations
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights To Purchase Preferred Stock
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RIGHTS AGREEMENT
This Agreement (this "Agreement"), dated as of February 12, 1999,
between HEALTHCARE RECOVERIES, INC., a Delaware corporation (the "Company"), and
NATIONAL CITY BANK, a national banking association (the "Rights Agent").
WITNESSETH:
WHEREAS, the Board of Directors of the Company (i) authorized the
issuance and declared a dividend distribution of one right (a "Right") for each
share of the Common Stock (as defined herein), of the Company outstanding as of
the Close of Business (as defined herein) on March 1, 1999 (the "Record Date"),
each Right initially representing the right to purchase one one-hundredth of a
share of Preferred Stock (as defined herein), and (ii) further authorized the
issuance of one Right with respect to each share of Common Stock of the Company
that shall become outstanding between the Record Date, and the earliest of the
Distribution Date, the Expiration Date or the Final Expiration Date (each such
term as defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the outstanding Common Stock of the Company;
provided, however, that (i) the term "Acquiring
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Person" shall not include an Exempt Person or a Permitted Holder; (ii) a Person
shall not be deemed to have become an Acquiring Person for any purpose of this
Agreement if the Board of Directors in its good faith judgment determines that a
Person has inadvertently become the Beneficial Owner of 20% or more of the
outstanding Common Stock of the Company (or in the case of a Permitted Holder,
has inadvertently acquired additional shares of Common Stock of the Company so
that it is no longer a Permitted Holder) and within ten days after the date upon
which the Company shall first become aware of the occurrence of such an event,
the Board of Directors in its sole discretion provides such Person with a
fifteen day period to divest a sufficient number of shares so that such Person
no longer is the Beneficial Owner of 20% or more of the outstanding Common Stock
of the Company (or in the case of a Permitted Holder, to divest all shares of
Common Stock of the Company which prevent such Person from being a Permitted
Holder), and such Person has so divested such shares of Common Stock of the
Company at the end of any such fifteen day period and has not acquired any
additional shares of Common Stock of the Company prior to the end of such
fifteen day period; and (iii) shares of Common Stock Beneficially Owned by the
Company or any Subsidiary of the Company shall not be considered outstanding for
purposes of calculating any Person's percentage ownership of the outstanding
Common Stock of the Company.
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended ("Exchange Act"), as in effect on the date of this Agreement.
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(d) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "Beneficially Own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, 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 (whether or not in
writing), or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates pursuant
to, and in accordance with the applicable rules and regulations promulgated
under the Exchange Act, until such tendered securities are accepted for purchase
or exchange; or (B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own," any
securities if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D or Schedule 13G
under the Exchange Act (or any comparable or successor report); or
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(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 (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
the proviso to clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; provided, however, that nothing in
this paragraph (d) shall cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Ohio are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Louisville, Kentucky time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Louisville, Kentucky time, on the
next succeeding Business Day.
(g) "Common Stock," when used with reference to the Company, shall
mean the common stock, par value $.001 per share, of the Company and, when used
with reference to any Person other than the Company, shall mean the capital
stock or other equity interests with the greatest per share or per unit voting
power of such other Person or, if such other Person is a Subsidiary of or is
controlled by another Person, the Person or Persons which ultimately controls
such first-mentioned Person.
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(h) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii).
(i) "Current Market Price" shall have the meaning set forth in
Section 11(d).
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a).
(l) "Equivalent Preferred Stock" shall have the meaning set forth
in Section 11(b).
(m) "Exchange Act" shall have the meaning set forth in Section
1(c).
(n) "Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed, established or holding
Common Stock for or pursuant to the terms of any such plan.
(o) "Expiration Date" shall have the meaning set forth in Section
7(a).
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(q) "Nasdaq Stock Market" shall have the meaning set forth in
Section 9(b).
(r) "Permitted Holder" shall mean: any Person who would otherwise
become an Acquiring Person solely by virtue of a reduction in the number of
outstanding shares of Common Stock; provided, however, that such Person shall
not be a Permitted Holder if, subsequent to such reduction, such Person shall
become the Beneficial Owner of any additional shares of Common Stock.
(s) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
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(t) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of the Company, having
the rights, preferences and limitations set forth in the Certificate of
Designations attached to this Agreement as Exhibit A, and, to the extent there
are not a sufficient number of shares of Series A Junior Participating Preferred
Stock authorized to permit the full exercise of the then outstanding Rights, any
other series of preferred stock of the Company designated for such purpose by
the Board of Directors of the Company containing terms substantially similar to
the terms of the Series A Junior Participating Preferred Stock.
(u) "Principal Party" shall have the meaning set forth in Section
13(b).
(v) "Purchase Price" shall have the meaning set forth in Section
4(a).
(w) "Record Date" shall have the meaning set forth in the recitals
clause at the beginning of this Agreement.
(x) "Redemption Price" shall have the meaning set forth in Section
23(a).
(y) "Right Certificate" shall have the meaning set forth in
Section 3(a).
(z) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii).
(aa) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii).
(bb) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a).
(cc) "Securities Act" shall mean the Securities Act of 1933, as
amended.
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(dd) "Stock Acquisition Date" shall mean the first date of a public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such;
provided, however, that if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a), then no Stock Acquisition Date shall
be deemed to have occurred.
(ee) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(ff) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are Beneficially Owned, directly or indirectly, by
such Person.
(gg) "Summary of Rights" shall have the meaning set forth in
Section 3(b).
(hh) "Trading Day" shall have the meaning set forth in Section
11(d).
(ii) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of the Common Stock) in accordance with the terms and conditions of this
Agreement, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable. If the Company appoints one or more co-Rights Agents,
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the respective duties of the Rights Agent and any co-Rights Agents shall be as
the Company shall determine.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth day after the Stock Acquisition Date or (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
of, or the first public announcement of the intent of any Person (other than an
Exempt Person) to commence, a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 20% or more of the outstanding Common Stock
(irrespective of whether any shares are actually purchased pursuant to such
offer) (the earlier of such dates described in clauses (i) and (ii) being
referred to herein as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(c)) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) each Right (and the right to
receive separate Right Certificates) will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, and the Rights Agent will send, by first class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Distribution Date, as shown by the records of the
Company, at the address of such holder shown on such records, a Right
Certificate in substantially the form of
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Exhibit B hereto ("Right Certificate") evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates and will be transferrable separately from the Common Stock.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially in the form attached hereto as Exhibit C ("Summary of Rights"), by
first-class, postage prepaid mail, to each record holder 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.
(c) With respect to certificates for Common Stock
outstanding as of the Record Date, until the Distribution Date (or, if earlier,
the Expiration Date or the Final Expiration Date), the Rights will be evidenced
by certificates for Common Stock registered in the names of the holders thereof
together with a copy of the Summary of Rights. Until the Distribution Date (or,
if earlier, the Expiration Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
(d) Certificates issued for Common Stock (including,
without limitation, certificates issued upon transfer or exchange of Common
Stock) after the Record Date, but prior to the earliest of the Distribution
Date, the Expiration Date or the Final Expiration Date, shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
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This certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in a Rights Agreement between
Healthcare Recoveries, Inc. and National
City Bank as Rights Agent, dated as of
February 12, 1999 (as the same may be
amended from time to time, the "Rights
Agreement"), the terms of which are
incorporated herein by reference and a copy
of which is on file at the principal
executive office of Healthcare Recoveries,
Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights
will be evidenced by separate certificates
and will no longer be evidenced by this
certificate. Healthcare Recoveries, Inc.
will mail to the holder of this certificate
a copy of the Rights Agreement without
charge after receipt by it of a written
request therefor. Under certain
circumstances as provided in the Rights
Agreement, Rights issued to or beneficially
owned by Acquiring Persons or their
Associates or Affiliates (as such terms are
defined in the Rights Agreement) or any
subsequent holder of such Rights will become
null and void.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the earliest of the Expiration Date, the Final Expiration Date or the
Distribution Date, be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the surrender for
transfer of the Rights associated with the Common Stock represented thereby. If
the Company purchases or acquires any Common Stock after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with shares of Common Stock which are no
longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation
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and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or trading system on which the Rights may from time to time be listed
or traded, or to conform to usage. Subject to the provisions of Sections 11 and
22, the Right Certificates whenever distributed shall be dated the Record Date
and on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as shall be set forth therein
at the price per one one-hundredth of a share of Preferred Stock set forth
therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided therein and in this Rights Agreement.
(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights that are or were at any
time on or after the Distribution Date Beneficially Owned by an Acquiring Person
or any Affiliate or Associate thereof (or any transferee of such Rights) shall
have impressed on, printed on, written on or otherwise affixed to it (if the
Company or the Rights Agent has knowledge that such Person is an Acquiring
Person or an Associate or Affiliate thereof or transferee of such Persons or a
nominee of any of the foregoing) the following legend:
The Beneficial Owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or
Associate (as such terms are defined in the Rights Agreement)
of an Acquiring Person or a subsequent holder of such Right
Certificate beneficially owned by such Persons. Accordingly,
under circumstances specified in the Rights Agreement, this
Right
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<PAGE> 15
Certificate and the Rights represented hereby will become null
and void.
Notwithstanding the above provision, failure to place such legend on any Right
Certificate representing Rights which are otherwise null and void pursuant to
the terms of this Agreement shall not affect the null and void status of such
Rights.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, Chief Executive Officer, President or
any Executive Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned (which countersignature may be a facsimile) by the Rights Agent
and shall not be valid for any purpose unless so countersigned. If any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered with the same
force and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
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<PAGE> 16
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, the
date of each of the Right Certificates, and the certificate numbers for each of
the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14, at any time
after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earlier of the Expiration Date or the Final Expiration
Date, any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock (or, following a Triggering Event, Common Stock,
other securities, cash or other assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer any Right Certificate shall
surrender the Right Certificate at the principal office of the Rights Agent with
the form of assignment on the reverse side thereof (or enclose with such Right
Certificate a written instrument of transfer in a form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall
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<PAGE> 17
surrender the Right Certificate or Right Certificates to be split up, combined
or exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign (which countersignature may be a facsimile) and deliver
to the person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(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 Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, if requested by
the Company, 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 execute and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e), the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including without limitation, the restrictions on
exercisability set forth in Section 9(b), Section 11(a)(iii) and Section 23(a)),
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed (with such signature duly guaranteed), to the Rights Agent
at the principal office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with
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<PAGE> 18
respect to each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the earlier of (i) the Close of Business on March 1, 2009
("Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (such date being herein referred to as the "Expiration
Date"), or (iii) the time at which such Rights are exchanged as provided in
Section 24.
(b) The Purchase Price shall initially be $65.00 for each
one one-hundredth of a share of Preferred Stock issued pursuant to the exercise
of a Right. The Purchase Price and the number of one one-hundredths of a share
of Preferred Stock or other securities or consideration to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13. The Purchase Price shall be payable in lawful money of
the United States of America, in accordance with Section 7(c).
(c) Except as provided in Section 7(d), upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by payment of the
Purchase Price or so much thereof as is necessary for the shares or other
securities or assets to be purchased and an amount equal to any applicable
transfer tax, by cash, certified check or official bank check payable to the
order of the Company or the Rights Agent, the Rights Agent, subject to Section
20(j), shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the total number of shares of Preferred
Stock so elected to be purchased and the Company will comply and hereby
authorizes and directs such transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights
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<PAGE> 19
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14, (iii) 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 designated by such holder, and (iv) after receipt promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate;
provided, however, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13, the Rights Agent shall promptly take
the appropriate actions corresponding to the foregoing clauses (i) through (iv).
If the Company is obligated to issue other securities (including Common Stock)
of the Company, pay cash and/or distribute other property pursuant to Section
11(a), the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon any exercise of Rights,
a number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.
(d) If the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights
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<PAGE> 20
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
(e) Notwithstanding anything in this 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.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Right Certificate
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<PAGE> 21
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy or cause to be
destroyed such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) Subject to the Company's rights under Section
11(a)(iii) to otherwise fulfill its obligations hereunder, the Company covenants
and agrees that it will cause to be reserved and kept available, out of and to
the extent of its authorized and unissued shares of Preferred Stock not reserved
for another purpose (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock or other securities) or
shares held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock or other
securities) that, as provided in this Agreement, including Section 11(a)(iii),
will be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the Company shall not be required to reserve and keep
available shares of Common Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set forth
in Section 11(a)(ii), Section 11(a)(iii) or Section 13 unless, and only to the
extent that, the Rights become exercisable pursuant to Section 7(a) following
such adjustments.
(b) The Company shall (i) use its best efforts to cause,
from and after such time as the Rights become exercisable, the Rights and all
shares of Preferred Stock (and following the occurrence of a Triggering Event,
Common Stock or other securities) issued or reserved for issuance upon exercise
thereof to be listed by The Nasdaq National Market (the
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<PAGE> 22
"Nasdaq Stock Market") or any other national securities exchange upon notice of
issuance upon such exercise and (ii) if then necessary to permit the offer and
issuance of such shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock or other securities), register and qualify such
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock or other securities) under the Securities Act and any applicable
state securities or "blue sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the Expiration Date or the Final
Expiration Date of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety days, the exercisability of the Rights in order to
prepare and file a registration statement under the Securities Act and permit it
to become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take
all such action as may be necessary to insure that all shares of Preferred Stock
(and following the occurrence of a Triggering Event, Common Stock or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price
- 19 -
<PAGE> 23
in respect thereof), be duly and validly authorized and issued and fully paid
and nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock (or shares of Common Stock or
other securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates for Preferred Stock (or shares
of Common Stock or other securities, as the case may be) upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock (or shares of Common Stock or other securities,
as the case may be) to a person other than such registered holder 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. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or shares of Common Stock or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender
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<PAGE> 24
and payment is a date upon which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock or other securities) transfer books of the
Company are open.
Section 11. Adjustments to Number and Kind of Shares; Number of Rights
or Purchase Price. The number and kind of shares subject to purchase upon the
exercise of each Right, the number of Rights outstanding and the Purchase Price
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) If the Company shall at any time after the Record
Date (A) declare or pay any dividend on Preferred Stock payable in shares of
Preferred Stock, (B) subdivide or split the outstanding shares of Preferred
Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Preferred Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Preferred Stock or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in Section 7(e) or this Section 11(a), the Purchase Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
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<PAGE> 25
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, the holder thereof would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one such
Right be less than the per share par value of the shares of capital stock of the
Company issuable upon exercise of the Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) If any Person shall become an Acquiring
Person (a "Section 11(a)(ii) Event"), then subject to Section 23(a), and except
as otherwise provided in this Section 11, each holder of a Right (except as
provided below and in Section 7(e)) shall thereafter have a right to receive for
each Right, upon exercise thereof in accordance with the terms of this Agreement
and payment of a price equal to the then current Purchase Price multiplied by
the number of one one-hundredths of a share of Preferred Stock for which a Right
was theretofore exercisable, in lieu of the number of one one-hundredths of a
share of Preferred Stock for which a Right was theretofore exercisable, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product, following such first
occurrence, shall be referred to as the "Purchase Price" with respect to each
Right for all purposes of this Agreement) by 50% of the Current
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<PAGE> 26
Market Price per share of Common Stock on the date of such first occurrence
(such number of shares is herein called the "Adjustment Shares"); provided that
the Purchase Price and the number of Adjustment Shares shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of
such first occurrence; and provided, further, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 hereof shall
apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
Notwithstanding the foregoing, upon the occurrence of a Section 11(a)(ii) Event,
any Rights that are or were at any time, on or after the earlier of the Stock
Acquisition Date or the Distribution Date, Beneficially Owned by the Acquiring
Person or any Associate or Affiliate of the Acquiring Person shall become null
and void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement.
(iii) If the number of shares of Common Stock
which are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) and the Rights shall become so exercisable, to
the extent permitted by applicable law and any agreements in effect on the date
hereof to which the Company is a party, the Company shall: (A) determine the
value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") and (B) with respect to each Right (subject to Section 7(e)),
upon the exercise of such Right and payment of the applicable Purchase Price,
make adequate provision to substitute for the Adjustment Shares (1) cash, (2) a
reduction in the Purchase Price, (3) equity securities of the Company
(including, without limitation, shares,
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<PAGE> 27
or units of shares, of special or preferred stock of the Company which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the Common Stock, are deemed in good faith by the Board
of Directors of the Company to have substantially the same value as shares of
Common Stock (such shares or units of shares of preferred stock are herein
called "Common Stock Equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an aggregate value
which, when added to the value of the shares of Common Stock actually issued
upon exercise of such Right, shall have an aggregate value equal to the Current
Value (less the amount of any reduction in the Purchase Price), where such
aggregate value has been determined in good faith by the Board of Directors of
the Company based upon the advice of a nationally recognized independent
investment banking firm selected in good faith by the Board of Directors of the
Company; provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the first occurrence of a Section 11(a)(ii) Event (the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the excess of
the Current Value over the Purchase Price. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the 30 day period set forth above may be extended to the
extent necessary, but not more than 120 days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such 30 day period, as it
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<PAGE> 28
may be extended, is herein called the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) and the last sentence of Section 11(a)(ii),
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price per share of the Common Stock on the Section 11(a)(ii) Trigger Date
and the per share or per unit value of any "Common Stock Equivalent" shall be
deemed to equal the Current Market Price per share of the Common Stock on such
date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
the Rights among holders of Rights pursuant to this Section 11(a)(iii).
(b) If the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date) Preferred Stock, shares
having the same rights, privileges and preferences as the Preferred Stock
("Equivalent Preferred Stock") or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or Equivalent
Preferred Stock (or having a
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<PAGE> 29
conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate offering
price of the total number of shares of Preferred Stock and/or Equivalent
Preferred Stock (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and if such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
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<PAGE> 30
(c) If the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Preferred Stock and the denominator of which shall be such Current Market Price
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and if such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii), the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purpose of computations made pursuant to
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<PAGE> 31
Section 11(a)(iii), the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per share
of the Common Stock for the ten consecutive Trading Days immediately following
such date; provided, however, that if the Current Market Price per share of the
Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (i) any dividend or distribution on the Common
Stock (other than a regular quarterly cash dividend and other than the Rights),
or (ii) any subdivision, combination or reclassification of the Common Stock,
and prior to the expiration of the requisite 30 Trading Day or ten Trading Day
period, as set forth above, the ex- dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the Current Market Price
shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc., Automated Quotations System or such
other system then in use, or, if on any such date the shares
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<PAGE> 32
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by the Board
of Directors of the Company shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange or national market
system on which the shares of Common Stock are listed or admitted to trading is
open for the transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange or national
market system, a Business Day. If the Common Stock is not publicly held or not
so listed or traded, "Current Market Price" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "Current Market Price" per share of Preferred Stock shall be
determined in the same manner as set forth for the Common Stock in Section
11(d)(i) hereof (other than the last sentence thereof). If the Current Market
Price per share or one one-hundredth of a share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in Section 11(d)(i)
hereof, the "Current Market Price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement)
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multiplied by the Current Market Price per share of the Common Stock. If neither
the Common Stock nor the Preferred Stock is publicly held or so listed or
traded, "Current Market Price" per share of the Preferred Stock shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the "Current Market Price" of one one-hundredth of a share of
Preferred Stock shall be equal to the "Current Market Price" of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other security or one millionth of a share of Preferred Stock, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the
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<PAGE> 34
provisions with respect to the shares of Preferred Stock contained in Section
11(a), (b), (c), (e), (g), (h), (i), (j), (k) (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest one-
millionth) obtained by (i) multiplying (x) the number of shares covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of one
one-hundredths of a share of Preferred Stock for which a Right may be exercised,
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-hundredths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
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<PAGE> 35
Rights shall be exercisable for the number of one one-hundredths of a share of
Preferred Stock for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
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<PAGE> 36
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredths of a share of Preferred Stock and the number of one hundredths of
a share which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
number of one one-hundredths of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action, including
using its reasonable best efforts to obtain any required stockholder approvals,
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable one one-hundredths of
a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such record
date of the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
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<PAGE> 37
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Stock Acquisition Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions not in the ordinary course of
the Company's business, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger or sale
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<PAGE> 38
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Stock Acquisition Date, it will not, except as permitted by Section 23 or
Section 27, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certification of Adjustments. Whenever an adjustment is
made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Stock or Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. The Rights Agent shall be fully protected in
relying on any certificate prepared by the Company pursuant to Sections 11 and
13 and on any adjustment
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<PAGE> 39
therein contained. Any adjustment to be made pursuant to Sections 11 and 13 of
this Agreement shall be effective as of the date of the event giving rise to
such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If at any time on or after the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person or Persons (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), and the Company
shall not be the surviving or continuing corporation of such consolidation or
merger, (y) any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), shall consolidate with, or merge
with and into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or of the Company or cash or any other property, or (z) the Company or
one or more of its Subsidiaries shall sell or otherwise transfer to any other
Person or any Affiliate or Associate of such Person (other than the Company or
any Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o)), in one transaction or a series of related transactions not
in the ordinary course of the Company's business, assets, cash flow, or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, proper provision shall be made so that (i) each holder of
record of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof and payment of the Purchase Price in
accordance with the terms of this
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<PAGE> 40
Agreement, such number of shares of validly issued, fully paid and nonassessable
and freely tradeable Common Stock of the Principal Party (as defined herein) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event hereof has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
Purchase Price in effect immediately prior to the first occurrence of a Section
11(a)(ii) Event by the number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such first
occurrence of a Section 11(a)(ii) Event) and (2) dividing that product (such
product, following the first occurrence of a Section 13 Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined as provided in Section
11(d) with respect to the Common Stock) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event (or the
fair market value on such date of other securities or property of the Principal
Party, as provided for herein); provided that the Purchase Price and the number
of shares of common stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of the first occurrence of a Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" for all purposes of this
Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 shall only
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<PAGE> 41
apply to such Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had he, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a): (A) the Person that is
the issuer of any securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the Common Stock of which has the greatest market value
or (B) if no securities are so issued, (x) the Person that is the other party to
the merger or
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<PAGE> 42
consolidation and that survives said merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in
clause (z) of the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case described in the foregoing
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or if
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of
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<PAGE> 43
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal Party involved
therein shall have executed and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) shall promptly be
performed in accordance with their terms and that such consolidation, merger,
sale or transfer shall not result in a default by the Principal Party under this
Agreement as the same shall have been assumed by the Principal Party pursuant to
Sections 13(a) and (b) hereof and further providing that, as soon as practicable
after executing such agreement pursuant to this Section 13, the Principal Party
will:
(i) prepare and file a registration statement
under the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the date of expiration of
the Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of
the Principal Party shall become listed on a national securities exchange, to
list (or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be listed by a national securities exchange or admitted for trading on the
Nasdaq Stock Market;
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<PAGE> 44
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first
refusal or preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding Rights. If any
of the transactions described in Section 13(a) shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii), the Rights which
have not theretofore been exercised shall thereafter be exercisable in the
manner described in Section 13(a). The provisions of this Section 13 shall
similarly apply to all successive mergers, consolidations, sales, transfers or
other Section 13 Events.
(d) Furthermore, if the Principal Party which is to be a
party to a transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its certificate of incorporation, articles of
incorporation, bylaws or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Current Market Price per share (determined pursuant to
Section 11(d)(i)) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Current Market Price (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13; then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction
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<PAGE> 45
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the holders of record
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the then
current market value of a whole Right. For the purposes of this Section 14(a),
the then current market value of a whole Right shall be determined in the same
manner as the Current Market Price of a share of Common Stock shall be
determined pursuant to Section 11(d)(i).
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-hundredths of a share of Preferred Stock) upon exercise of the
Rights, or to exchange the Rights pursuant to Section 24 of this Agreement for
fractions of Common Stock. Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock. With respect to
fractional
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<PAGE> 46
shares of Preferred Stock that are not integral multiples of one one-hundredth
of a share of Preferred Stock, if the Company does not issue fractional shares
or depositary receipts in lieu thereof, the Company shall pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-hundredth of a share of Preferred Stock. For purposes of
this Section 14(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be the Current Market Price of one one-hundredth of a
share of Preferred Stock (as determined pursuant to Section 11(d)(ii)).
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common Stock. For the
purposes of this Section 14(c), the current market value of one share of Common
Stock shall be the Current Market Price of a share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof).
(d) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares (other than fractions which are integral multiples of one one-hundredths
of a share of Preferred Stock) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18, are vested in the respective holders of record of the Right Certificates
(and, prior to the Distribution Date, the holders of
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<PAGE> 47
record of the Common Stock); and any holder of record of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and,
accordingly, that they will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not
be evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates
will be transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common
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<PAGE> 48
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent or the transfer agent of the Common
Stock) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, 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 17. Right Certificate Holder Not Deemed a Stockholder. No
holder of a Right or a Right Certificate, as such, shall be entitled to vote,
receive dividends in respect of or be deemed for any purpose to be the holder of
Preferred Stock or any other securities of the Company which may at any time be
issuable upon the exercise of the Rights, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions
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<PAGE> 49
affecting stockholders (except as set forth in Section 25), or to receive
dividends or subscription rights in respect of any such stock or securities, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate, certificate for Common Stock or other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
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<PAGE> 50
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. If at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
(b) If 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 such Right Certificates so countersigned; and
if 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
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<PAGE> 51
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company or its own in-house counsel), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
Chief Executive Officer, President, any Vice President, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its
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<PAGE> 52
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 Agreement or the execution and
delivery of this Agreement (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights or any adjustment required under the provisions hereof or responsible
for the manner, method or amount of any such change or adjustment or the
ascertaining of the existence of facts that would require any such change in the
exercisability of the Rights or any change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual notice of
any such change or adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Common Stock
or other securities will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
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<PAGE> 53
(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 Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions.
(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 Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has either not been completed
or
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<PAGE> 54
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and the Preferred Stock by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent (with or without cause)
upon 30 days' notice in writing, mailed to the Rights Agent or any successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and the Preferred Stock by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the holder of record of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a
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<PAGE> 55
corporation organized and doing business under the laws of the United States or
any State thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has, or together with its
parent entity has, at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100 million. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Expiration Date, the Purchase Price per share and the number or kind of
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement.
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<PAGE> 56
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the Stock Acquisition Date (or,
if the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the Current Market
Price, as defined in Section 11(d)(i), of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors of the Company.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within ten days
after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent of the
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<PAGE> 57
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23 or any
defect therein shall not affect the legality or validity of any redemption
hereunder. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24, and other
than in connection with the purchase of Common Stock prior to the Distribution
Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
7(e)) for Common Stock or Common Stock Equivalents at an exchange ratio of one
share of Common Stock or Common Stock Equivalent per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of shares
of Common Stock representing 50% or more of the shares of the Common Stock then
outstanding.
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<PAGE> 58
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock or Common Stock
Equivalents equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of such Rights
at the last addresses of the holders as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock or Common Stock Equivalents for Rights will be effected and, in the event
of any partial exchange, the number and kind of Rights which will be exchanged.
The failure to give notice required by this Section 24 or any defect therein
shall not affect the legality or validity of any exchange hereunder. Any partial
exchange shall be effected pro rata based on the number of Rights being
exchanged (other than Rights which have become void pursuant to the provisions
of Section 7(e)) held by each holder of such Rights.
(c) If there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company may, at its option, take all such action as may be
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<PAGE> 59
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.
Section 25. Notice of Proposed Actions.
(a) If the Company, after the Stock Acquisition Date,
shall propose to (i) effect any of the transactions referred to in Section
11(a)(i) or to pay any dividend to the holders of record of its Preferred Stock
payable in stock of any class or to make any other distribution to the holders
of record of its Preferred Stock (other than a quarterly cash dividend), (ii)
offer to the holders of record of its Preferred Stock options, warrants, or
other rights to subscribe for or to purchase shares of Preferred Stock
(including any security convertible into or exchangeable for Preferred Stock) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, (iii) effect any
reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, (iv) effect any consolidation or merger with or
into, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions not in the ordinary course of the Company's
business, of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of record of Rights, in accordance
with Section 26, notice of such proposed action, which shall specify the record
date for the purposes of such transaction referred to in Section 11(a)(i), or
such dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for
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<PAGE> 60
determining participation therein by the holders of record of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of record of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of record of Preferred Stock, whichever
shall be the earlier. The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
(b) If any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Agreement are proposed, then, in any such case,
the Company shall give to each holder of Rights, in accordance with Section 26,
notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13, as the case may be, and, upon consummating such transaction, shall
similarly give notice thereof to each holder of Rights.
(c) If any Section 11(a)(ii) Event shall occur, then all
references in this Section 25 to Preferred Stock shall be deemed thereafter to
refer to the Common Stock or other securities for which the Rights are then
exercisable.
Section 26. Notices. Except as provided in Section 21, notices or
demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of record of any Right Certificate or Right to or on the Company
shall be sufficiently given or made if sent by first-class
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<PAGE> 61
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Healthcare Recoveries, Inc.
1400 Watterson Tower
Louisville, Kentucky 40218
Attention: Chairman of the Board
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of record of any
Right Certificate or Right to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
National City Bank
Corporate Trust Department
1900 East 9th Street
Cleveland, Ohio 44114
Attention: Sherry L. Damore
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right 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 it appears
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent.
Section 27. Supplements and Amendments. Prior to the Stock Acquisition
Date, the Company may in its sole and absolute discretion and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights or the Common Stock.
From and after the Stock Acquisition Date, the Company may and the Rights Agent
shall, if the Company so directs, supplement or amend this
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<PAGE> 62
Agreement without the approval of any holders of Rights in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, or (iii) change
or supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided, that no such supplement or amendment shall
adversely affect the interests of the holders of Rights (other than any interest
of 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 27, the Rights Agent shall execute such supplement or
amendment.
Section 28. Determinations and Actions by the Board. For all purposes
of this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on the date
of this Agreement. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the
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<PAGE> 63
foregoing) which are done or made by the Board in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board to any liability to
the holders of the Rights.
Section 29. Successors. All of the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of record of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 31. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
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<PAGE> 64
Section 34. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
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<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
Attest: HEALTHCARE RECOVERIES, INC.
By: /s/ Douglas R. Sharps By: /s/ Patrick B. McGinnis
------------------------- -----------------------
Name: Douglas R. Sharps Name: Patrick B. McGinnis
Title: CFO Title: Chairman, CEO & President
Attest: NATIONAL CITY BANK
By: /s/ David B. Davis By: /s/ Sherry L. Damore
------------------------- -----------------------
Name: David B. Davis Name: Sherry L. Damore
Title: Vice President Title: Vice President
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<PAGE> 66
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HEALTHCARE RECOVERIES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Healthcare Recoveries, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on February 12, 1999:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation") the Board of Directors hereby creates a series
of Preferred Stock, par value $0.001 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
<PAGE> 67
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of common
stock, par value $0.001 per share (the "Common Stock"), of the Corporation,
and of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the
date of issue of such shares is prior to the record date for
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<PAGE> 68
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock,
or by law, the holders of shares of Series A Preferred Stock and the
holders of Common stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
- 3 -
<PAGE> 69
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become
- 4 -
<PAGE> 70
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
- 5 -
<PAGE> 71
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
- 6 -
<PAGE> 72
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its Chairman of the Board and attested by its Secretary
this _____ day of February, 1999.
--------------------------------
Chairman of the Board
Attest:
- ------------------------------
Secretary
- 7 -
<PAGE> 73
EXHIBIT B
[Form of Right Certificate]
Certificate No. R-__ _______ Rights
NOT EXERCISABLE AFTER March 1, 2009 OR
UNDER CERTAIN CIRCUMSTANCES EARLIER. 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.
IF THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN
ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON OR A
TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY
SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY WILL BECOME NULL
AND VOID.
Right Certificate
HEALTHCARE RECOVERIES, INC.
This certifies that _________________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of February 12, 1999 (the "Rights Agreement") between
Healthcare Recoveries, Inc., a Delaware corporation (the "Company"), and
National City Bank, a national banking association (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., Louisville, Kentucky
time, on March 1, 2009, at the principal office of the Rights Agent, or its
successors as Rights Agent, one one-hundredth of a fully paid and nonassessable
share of Series A Junior Participating Preferred Stock, $.001 par value per
share ("Preferred Stock"), of the Company at a purchase price of $65.00 as the
same
<PAGE> 74
may from time to time be adjusted in accordance with the Rights Agreement
("Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares of Preferred Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of March 1, 1999
(the "Record Date") based on the shares of Preferred Stock of the Company as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of shares of Preferred Stock which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a
B-2
<PAGE> 75
like aggregate number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.001 per Right or (ii) may be exchanged in whole or in part
for shares of common stock, $.001 par value per share of the Company ("Common
Stock") or common stock equivalents.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than, except as set
forth above, fractions that are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof, cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement) or to receive dividends or subscription rights, or
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<PAGE> 76
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-4
<PAGE> 77
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal, dated as of .
-------------- ----
ATTEST: HEALTHCARE RECOVERIES, INC.
By:
- ----------------------------- ----------------------------
Secretary Name:
Title:
Countersigned:
NATIONAL CITY BANK
By
------------------------
Authorized signature
B-5
<PAGE> 78
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________________________________________
______________________________________________________________________________
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney to transfer the within Right Certificate on the
books of the within-named Company, with full power of substitution.
Dated: ____________ , __
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
_________________________________
<PAGE> 79
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and (2)
after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ]
did not acquire the Rights evidenced by this Right Certificate from any Person
who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person or any transferee of such Persons.
Dated: ,
------------- --
----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment 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.
- 2 -
<PAGE> 80
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to
Exercise the Right Certificate.)
To: Healthcare Recoveries, Inc.
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such share(s) be issued in the name: 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 must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
<PAGE> 81
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
-----------------------------------
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Dated: ,
---------------- -----
----------------------------------
Signature
- 2 -
<PAGE> 82
EXHIBIT C
HEALTHCARE RECOVERIES, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On February 12, 1999, the Board of Directors (the "Board") of
Healthcare Recoveries, Inc.. (the "Company") adopted a Rights Agreement (the
"Rights Agreement") and authorized and declared a dividend of one Preferred
Stock Purchase Right (a "Right") for each outstanding share of common stock, par
value $.001 per share ("Common Stock") of the Company. The dividend is payable
on March 1, 1999 to the stockholders of record on that date (the "Record
Date"), and with respect to Common Stock issued thereafter until the
Distribution Date (as hereinafter defined) or the expiration or earlier
redemption or exchange of the Rights. Except as set forth below, each Right
entitles the registered holder to purchase from the Company at any time after
the Distribution Date one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.001 per share ("Preferred Stock") at
a price of $65.00 per one one-hundredth of a share, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in the
Rights Agreement.
Initially the Rights will be attached to all certificates representing
shares of Common Stock then outstanding, and no separate Right Certificates will
be distributed. The Rights will become exercisable and separate from the shares
of Common Stock upon the earlier to occur of (i) 10 days after the date (the
"Stock Acquisition Date") of a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding shares of Common Stock (such person or group being
hereinafter referred to as an "Acquiring Person") ; or (ii) 10 business days (or
such later date as the Board may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group becoming the beneficial
owner of 20% or more of the outstanding shares of Common Stock (the earlier of
such dates being called the "Distribution Date"). Shares of Common Stock
beneficially owned by the Company or any subsidiary of the Company will not be
considered outstanding for purposes of calculating the percentage ownership of
any person.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with, and only with, the shares of Common Stock.
Until the Distribution Date (or earlier redemption or expiration), new Common
Stock certificates issued after the Record Date upon transfer or new issuance of
shares of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such
<PAGE> 83
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the shares of Common Stock as of the close of business on
the Distribution Date, and such separate Right Certificates alone will evidence
the Rights. The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on March 1, 2009, unless earlier
redeemed by the Company as described below.
Each of the following persons will not be deemed to be an Acquiring
Person even if they have acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Stock of the Company: (i) the
Company, any subsidiary of the Company, or any employee benefit plan of the
Company or of any subsidiary of the Company and (ii) any person who would
otherwise become an Acquiring Person solely by virtue of a reduction in the
number of outstanding shares of Common Stock unless and until such person shall
become the beneficial owner of any additional shares of Common Stock.
If any person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive, in lieu of shares of
Preferred Stock and upon payment of the Purchase Price, shares of Common Stock
(or in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the Purchase Price of the Right.
Notwithstanding the foregoing, all rights that are, or were, beneficially owned
by an Acquiring Person or any affiliate or associate thereof will be null and
void and not exercisable.
If, at any time on or after the Stock Acquisition Date, (i) the Company
is acquired in a merger or other business combination transaction in which the
holders of all of the outstanding shares of Common Stock immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (ii) more than 50% of the Company's assets, cash
flow or earning power is sold or transferred other than in the ordinary course
of the Company's business, then each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, in lieu of shares of Preferred Stock and upon
exercise and payment of the Purchase Price, common shares of the acquiring
company having a value equal to two times the Purchase Price. If a transaction
would otherwise result in a holder's having a Flip-In as well as a Flip-Over
Right, then only the Flip-Over Right will be exercisable; if a transaction
results in a holder's having a Flip-Over Right subsequent to a transaction
resulting in a holder's having a Flip-In Right, a holder will have Flip-Over
Rights only to the extent such holder's Flip-In Rights have not been exercised.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or (iii)
upon the distribution to holders of the
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<PAGE> 84
Preferred Stock of evidences of indebtedness or assets (excluding dividends
payable in Preferred Stock) or of subscription rights or warrants (other than
those referred to above). However, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%.
The number of outstanding Rights and the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per share of Common
Share. In the event of liquidation, the holders of the Preferred Stock will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per share
of Common Stock. Each share of Preferred Stock will have 100 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preferred Stock will be entitled to receive 100 times
the amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
To the extent that, after the triggering of Flip-In Rights,
insufficient shares of Common Stock are available for the exercise in full of
the Rights, holders of Rights will receive upon exercise shares of Common Stock
to the extent available and then cash, property or other securities of the
Company, in proportions determined by the Company, so that the aggregate value
received is equal to twice the Purchase Price.
The Company is not required to issue fractional Preferred Shares (other
than factions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company be evidenced by depository
receipts), and in lieu thereof, a payment in cash will be made to the holder of
such Rights equal to the same fraction of the current value of one one-hundredth
of a share of Preferred Stock. Following the triggering of the Flip-In Rights,
the Company will not be required to issue fractional shares of Common Stock upon
exercise of the Rights and, in lieu thereof, a payment in cash will be made to
the holder of such Rights equal to the same fraction of the current market value
of a share of Common Stock.
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<PAGE> 85
In general, the Company may redeem the Rights at a price of $.001 per
Right (subject to adjustment), at any time before the close of business on the
Stock Acquisition Date.
At any time after any person becomes an Acquiring Person and prior to
the acquisition by any person of 50% or more of the outstanding shares of Common
Stock, the Board of Directors of the Company may exchange the then outstanding
and exercisable Rights (other than Rights owned by an Acquiring Person, which
will have become null and void), in whole or in part, for shares of Common
Stock, each Right being exchangeable for one share of Common Stock, or common
stock equivalents equal to one share of Common Stock, subject to adjustment.
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.
The issuance of the Rights is not taxable to the Company or to
stockholders under presently existing federal income tax law, and will not
change the way in which stockholders can presently trade the Company's shares of
Common Stock. If the Rights should become exercisable, stockholders, depending
on then existing circumstances, may recognize taxable income.
Prior to the Stock Acquisition Date, the Rights Agreement generally may
be amended by the Board of Directors of the Company. On or after the Stock
Acquisition Date, the Company may amend the Rights Agreement only to (i) cure
any ambiguity, (ii) correct or supplement any provision which may be defective
or inconsistent with the other provisions of the Rights Agreement, or (iii)
change or supplement the Rights Agreement in any other manner which the Company
may deem necessary or desirable, provided that no amendment shall adversely
affect the interests of the holders of Rights (other than any interest of an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired.
Accordingly, the existence of the Rights may deter certain acquirors from making
takeover proposals or tender offers. However, the rights plan helps ensure that
the Company's stockholders receive fair and equal treatment in the event of any
proposed takeover of the Company. The adoption of the plan is not in response to
any specific takeover threat or proposal, but is a precaution taken to protect
the rights of the Company's stockholders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Registration Statement on
Form 8-A with respect to the Rights filed with the Securities and Exchange
Commission (Commission File No. 0-22585). A copy of the Rights Agreement is
available free of charge from the Company, 1400 Watterson Tower, Louisville,
Kentucky, 40218, Attention: Secretary. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated in this summary description by
reference.
C-4
