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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 (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CORVEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0282651
(State of incorporation or organization) (IRS Employer Identification No.)
1920 Main Street, Suite 1090
Irvine, California 92614
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
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(Title of Class)
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
Effective as of February 11, 1997, pursuant to a Preferred Shares
Rights Agreement (the "Rights Agreement") between CorVel Corporation, a
Delaware corporation (the "Company") and U.S. Stock Transfer Corporation, a
California corporation, as Rights Agent (the "Rights Agent"), the Company's
Board of Directors (the "Board") declared a dividend of one right (a "Right")
to purchase one one-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock (the "Series A Preferred") for each outstanding
share of Common Stock, par value $0.0001 per share ("Common Shares"), of the
Company. The dividend is payable on February 28, 1997 (the "Record Date") to
stockholders of record as of the close of business on that date. Each Right
entitles the registered holder to purchase from the Company, upon the occurrence
of a certain event or events as described below, one one-hundredth of a share
of Series A Preferred at an exercise price of $125.00 (the "Purchase Price"),
subject to adjustment. In addition, under certain circumstances described more
fully herein, the Rights may become exercisable for a number of Common Shares
having a value equal to two times the Purchase Price and/or common stock of
certain acquiring companies having a value equal to two times the Purchase
Price. Moreover, under certain circumstances described more fully herein, each
Right may be exchanged by the Board at an exchange rate of one share of Common
Stock (or a fraction of a share of the Preferred Stock having equivalent
market value) per Right. Under certain circumstances described more fully
herein, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right.
CERTAIN ANTI-TAKEOVER EFFECTS
The Rights approved by the Board are designed to protect and maximize
the value of the outstanding equity interests in the Company in the event of an
unsolicited attempt by an acquiror to take over the Company in a manner or on
terms not approved by the Board. Unsolicited takeover attempts frequently
include coercive tactics designed to deprive the Board and the Company's
stockholders of any real opportunity to determine the destiny of the Company.
The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of a 15% or
greater position to be followed by a merger or a partial or two-tier tender
offer that does not treat all stockholders equally. These tactics can operate
to unfairly pressure stockholders, force them out of their investment and
deprive them of the full value of their shares in the Company.
The Rights are not intended to prevent a takeover of the Company and
will not do so. The Rights may be redeemed by the Company at $.01 per Right
within ten days (or on such later date as may be determined by a majority of
the Continuing Directors (as defined in the Rights Agreement)) after the
accumulation of 15% or more of the Company's Common Shares by a single
acquiror or
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group. Accordingly, the Rights should not interfere with any merger or
business combination approved by the Board.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board.
The Rights may cause substantial dilution to a person or group that attempts to
acquire the Company on terms or in a manner not approved by the Board, except
pursuant to an offer conditioned upon the negation, purchase or redemption of
the Rights. As a result, while the Rights may provide the Board with leverage
to obtain a higher price from a potential acquiror, they may also prevent or
deter offers not approved by the Board, and therefore deprive stockholders,
without providing them with the opportunity to vote thereon, of the benefits of
offers which may be at a higher price than the current market price of the
Company's Common Shares. In addition, assuming an active trading market in the
Rights themselves does not develop, stockholders with lesser financial means
might not be able to take full economic advantage of the Rights. Further, the
implementation of a rights plan may heighten the susceptibility of the Company
to greenmail by stockholders who threaten to acquire a sufficient equity
position to pass the Rights' triggering threshold, although the Board can
respond to any such action by redeeming the Rights at $.01 per Right.
Issuance of the Rights does not in any way weaken the financial
strength of the Company or interfere with its business plans. The issuance of
the Rights themselves has no dilutive effect, will not affect reported earnings
per share, should not be taxable to the Company or to its stockholders, and
will not change the way in which the Company's Common Shares are presently
traded. The Company's Board believes that the Rights represent a sound and
reasonable means of addressing the complex issues of corporate policy created
by the current takeover environment.
RIGHTS EVIDENCED BY COMMON SHARE CERTIFICATES
The Rights will not be exercisable until the Distribution Date
(defined below). Prior to the Distribution Date, certificates for the Rights
("Rights Certificates") will not be sent to stockholders and the Rights will
attach to and trade only together with the Common Shares. Accordingly, Common
Share certificates outstanding on the Record Date will evidence the Rights
related thereto, and Common Share certificates issued after the Record Date but
prior to the Distribution Date will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender or transfer of any certificates for
Common Shares, even without notation or a copy of the Summary of Rights being
attached thereto (but as to certificates representing Common Shares issued
after the Record Date, only if they bear the legend required by the Rights
Agreement), will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
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DISTRIBUTION DATE
Until the earlier to occur of (i) 10 days (or such later date as may be
determined by action of the Continuing Directors prior to such time as any
person becomes an Acquiring Person, as such term is defined below) following the
date of public announcement by the Company or an Acquiring Person that any
person or group of affiliated or associated persons have become an Acquiring
Person, (ii) 10 business days (or such later date as may be determined by action
of the Continuing Directors prior to such time as any person becomes an
Acquiring Person) following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of associated persons of 15% or
more of the Company's outstanding Common Shares, or (iii) 10 days following the
date on which a majority of the Continuing Directors, in good faith, informs the
Company by written notice of the existence of an Acquiring Person (the earliest
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of the Summary
of Rights, as set forth in Exhibit C to the Rights Agreement, attached thereto.
"Acquiring Person" shall mean any person who or which, together with
all affiliates and associates of such person is the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding, but shall not include
(i) the Company, any subsidiary of the Company, any employee benefit plan of the
Company or any subsidiary of the Company, or any person holding Common Shares
for or pursuant to the terms of any such plan, (ii) Americable, Inc., a
Minnesota corporation ("Americable") and wholly-owned subsidiary of ENStar Inc.,
a Minnesota corporation ("ENStar"), or any affiliate and associate of Americable
including ENStar (but only to the extent that Americable and its associates and
affiliates beneficially own less than 33% of the Common Shares of the Company);
or (iii) any person, together with all affiliates and associates of such person,
who or which would be an Acquiring Person solely by reason of (A) being the
beneficial owner of Common Shares, the beneficial ownership of which was
acquired by such person (and the affiliates and associates of such person)
pursuant to any action or transaction, or series of related actions or
transactions, approved by the Board, upon the affirmative vote of a majority of
the Continuing Directors, prior to the earlier to occur of (1) the Distribution
Date or (2) any exchange made pursuant to the Rights Agreement, or (B), a
reduction in the number of issued and outstanding Common Shares pursuant to a
transaction or series of related transactions approved by the Board, upon the
affirmative vote of a majority of the Continuing Directors; provided further
that in the event that such person described in clause (iii) above does not
become an Acquiring Person by reason of clause (A) or (B), such person
nonetheless shall become an Acquiring Person in the event such person, together
with all affiliates and associates of such person, thereafter acquires
beneficial ownership of any additional Common Shares unless the acquisition of
such beneficial ownership would not result in such person becoming an Acquiring
Person by reason of subclause (A) or (B) of clause (iii) above. Notwithstanding
the foregoing, if the Board determines (upon the affirmative vote of a majority
of the Continuing Directors) in good faith that a person who would otherwise be
an
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Acquiring Person is eligible to file and did file a Schedule 13G and such
person divests (and/or causes such person's affiliates and/or associates to
divest) as promptly as practicable a sufficient number of Common Shares so that
such person would no longer be an Acquiring Person as defined pursuant to the
foregoing provisions, then such person shall not be deemed to be an "Acquiring
Person" for purposes of the Rights Agreement.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without such notation or
a copy of the Summary of Rights (as set forth in Exhibit C to the Rights
Agreement) being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate.
ISSUANCE OF RIGHTS CERTIFICATES; EXPIRATION OF RIGHTS
As soon as practicable following the Distribution Date, separate
Rights Certificates will be mailed to holders of record of the Common Shares as
of the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights from and after the Distribution
Date. All Common Shares issued prior to the Distribution Date will be issued
with Rights. Common Shares issued after the Distribution Date (i) shall be
issued with Rights if such shares are issued pursuant to the exercise of stock
options or under employee benefit plans or arrangements unless such issuance
would result in (or create a risk that) such options, plans or arrangements
would not qualify for otherwise available special tax treatment and (ii) may be
issued in any other case, if deemed necessary and appropriate by the
affirmative vote of a majority of the Continuing Directors; however (A) no such
Right Certificate shall be issued if, and to the extent that, such issuance
would create a significant risk of or result in material adverse consequences
to the Company or the person being issued the Right Certificate, and (B) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of issuance thereof. Except
as otherwise determined by the Board, no other Common Shares issued after the
Distribution Date will be issued with Rights. The Rights will expire on the
earliest of (i) February 10, 2007 (the "Final Expiration Date"), (ii)
redemption or exchange of the Rights as described below, or (iii) consummation
of an acquisition of the Company satisfying certain conditions by a person who
acquired shares pursuant to an agreement approved by the Board upon the
affirmative vote of the Continuing Directors, prior to there being an Acquiring
Person.
INITIAL EXERCISE OF THE RIGHTS
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $125.00 per Right, one one-hundredth of a share of
Series A Preferred, subject to adjustment as described in the Rights
Agreement. In addition, under certain circumstances described more fully
herein, the Rights may become exercisable for Common Shares having
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a value equal to two times the Purchase Price and/or common stock of certain
acquiring companies having a value equal to two times the Purchase Price.
RIGHT TO BUY COMPANY COMMON SHARES
Unless the Rights are earlier redeemed, in the event that an Acquiring
Person becomes the beneficial owner of 15% or more of the Company's Common
Shares then outstanding, then proper provision will be made so that each holder
of a Right which has not theretofore been exercised (other than Rights
beneficially owned by the Acquiring Person, which will thereafter be void) will
thereafter have the right to receive, upon exercise and payment of the Purchase
Price, Common Shares having a value equal to two times the Purchase Price. For
example, if the market price of Common Shares on the Share Acquisition Date (as
defined below) was $50.00, a person holding one Right could purchase five Common
Shares upon exercise of such Right ($125.00/$25.00). Rights are not exercisable
following the occurrence of an event as described above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that the Company does not have sufficient Common Shares
available for all Rights to be exercised, or the Board decides that it is
necessary and not contrary to the interests of Rights holders to do so, the
Company may instead substitute cash, assets or other securities for the Common
Shares for which the Rights would have been exercisable under this provision.
RIGHT TO BUY ACQUIRING COMPANY STOCK
Similarly, unless the Rights are earlier redeemed, in the event that,
after the Share Acquisition Date and without the affirmative vote of a majority
of the Continuing Directors, (i) the Company is acquired in a merger or other
business combination transaction, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold (either of which event is referred
to herein as an "Acquisition"), proper provision must be made so that each
holder of a Right which has not theretofore been exercised will thereafter have
the right to receive, upon exercise, shares of common stock of the acquiring
company having a value equal to two times the Purchase Price. So (assuming no
satisfaction of such conditions) if for example the market price of the
acquiror's stock on the date of the Acquisition were $25.00, a person holding
one Right could purchase 10 shares of the acquiror's Common Stock upon exercise
of such Right ($125.00/$12.50).
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EXCHANGE PROVISION
At any time after the acquisition by an Acquiring Person of 15% or
more of the Company's outstanding Common Shares and prior to the acquisition by
such Acquiring Person of 50% or more of the Company's outstanding Common
Shares, the Board, following the approval of a majority of Continuing
Directors, may exchange the Rights (other than Rights owned by the Acquiring
Person), in whole or in part, at an exchange ratio of one Common Share per
Right.
REDEMPTION
At any time on or prior to the close of business on the earlier of (i)
the 10th day following the acquisition by an Acquiring Person (the "Share
Acquisition Date") or such later date as may be determined by a majority of the
Continuing Directors and publicly announced by the Company, or (ii) the Final
Expiration Date of the Rights, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right.
ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price payable, the number of Rights and the number of
Series A Preferred or Common Shares or other securities or property issuable
upon exercise of the Rights are subject to adjustment from time to time in
connection with the dilutive issuances by the Company as set forth in the
Rights Agreement. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price.
CASH PAID INSTEAD OF ISSUING FRACTIONAL SHARES
No fractional portion less than integral multiples of one
one-hundredth of a Preferred Share will be issued upon exercise of a Right and
in lieu thereof, an adjustment in cash will be made based on the market price
of the Common Shares on the last trading date prior to the date of exercise.
NO STOCKHOLDERS' RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company (other than any rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
AMENDMENT OF RIGHTS AGREEMENT
The provisions of the Rights Agreement may be supplemented or amended
by action of the Board upon approval by a majority of the Continuing Directors
in any manner prior to the close of business on the Distribution Date without
the approval of Rights holders. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement.
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RIGHTS AND PREFERENCES OF THE SERIES A PREFERRED
Series A Preferred purchasable upon exercise of the Rights will not be
redeemable. Each share of Series A Preferred will be entitled to an aggregate
dividend of the greater of (i) $1.00 in cash or (ii) 100 times the dividend
declared per Common Share. In the event of liquidation, the holders of the
Series A Preferred will be entitled to a minimum preferential liquidation
payment equal to the greater of (i) $100.00 per share, plus an amount equal to
the accrued and unpaid dividends and distributions thereon, whether or not
declared, or (ii) an aggregate amount per share equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, plus an amount equal to the accrued and unpaid dividends and
distributions on the Series A Preferred whether or not declared. Each share of
Series A Preferred will have 100 votes, voting together with the Common Shares.
In the event of any merger, consolidation or other transaction in which the
Common Shares are changed or exchanged, each share of Series A Preferred will
be entitled to receive 100 times the amount received per Common Share. These
rights are protected by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights
of the shares of Series A Preferred, the value of the one one-hundredth
interest in a share of Series A Preferred purchasable upon exercise of each
Right should approximate the value of one Common Share.
ITEM 2. EXHIBITS.
EXHIBIT
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99.1 Preferred Shares Rights Agreement, dated as of February
11, 1997, by and between Corvel Corporation and U.S. Stock
Transfer Corporation, including the Certificate of
Determination, the form of Rights Certificate and the
Summary of Rights attached thereto as Exhibits A, B and C,
respectively.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CORVEL CORPORATION
Date: February 24, 1997
By: /s/ RICHARD J. SCHWEPPE
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Richard J. Schweppe
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. EXHIBIT PAGE NO.
- ------- ------- ----------
99.1 Preferred Shares Rights Agreement, dated as of
February 11, 1997, by and between Corvel Corporation
and U.S. Stock Transfer Corporation, including the
Certificate of Determination, the form of Rights
Certificate and the Summary of Rights attached
thereto as Exhibits A, B and C, respectively.
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EXHIBIT 99.1
_________________________________________________________________
CORVEL CORPORATION
and
U.S. STOCK TRANSFER CORPORATION
(Rights Agent)
Preferred Shares Rights Agreement
Dated as of February 11, 1997
_________________________________________________________________
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TABLE OF CONTENTS
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . 5
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . 5
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . 7
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . 8
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Right . . 9
Section 8. Cancellation and Destruction of Right Certificates . . . . . . . 11
Section 9. Availability of Preferred Shares . . . . . . . . . . . . . . . . 11
Section 10. Preferred Shares Record Date . . . . . . . . . . . . . . . . . . 13
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . 23
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . 24
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . . 25
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . 26
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . 26
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
i.
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<TABLE>
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Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . 29
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . 33
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . 34
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 29. Determinations and Actions by the Board of Directors . . . . . . . 35
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . 35
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A - Form of Certificate of Designation of Series A Junior
Participating Preferred Stock of Corvel Corporation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
ii.
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RIGHTS AGREEMENT
Rights Agreement, dated as of February 11, 1997, between
CorVel Corporation, a Delaware corporation (the "Company"), and U.S. Stock
Transfer Corporation, a California corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one Preferred Share (as hereinafter defined) purchase
right (a "Right") for each Common Share (as hereinafter defined) of the Company
outstanding as of the Close of Business (as hereinafter defined) on February
28, 1997 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as such number may be adjusted pursuant to
the provisions of this Agreement) upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of one
Right with respect to each Common Share that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date or the Final Expiration Date in accordance with the provisions
of Section 22.
Now, Therefore, in consideration of the promises 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 15% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of
any such plan, (ii) Americable, Inc., a Minnesota corporation and wholly-owned
subsidiary of ENStar Inc., a Minnesota corporation, together with all
Affiliates and Associates (collectively, "Americable"), but only to the extent
that Americable shall beneficially own no more than 33% of the Common Shares of
the Company then outstanding, or (iii) any Person, together with all Affiliates
and Associates of such Person, who or which would be an Acquiring Person solely
by reason of (A) being the Beneficial Owner of Common Shares, the Beneficial
Ownership of which was acquired by such Person (and the Affiliates and
Associates of such Person) pursuant to any action or transaction, or series of
related actions or transactions, approved by the Board of Directors, upon the
affirmative vote of a majority of the Continuing Directors prior to the
Distribution Date or (B), a reduction in the number of issued and outstanding
Common Shares pursuant to a transaction or series or related transactions
approved by the Board of Directors, upon the affirmative vote of a majority of
the Continuing Directors; provided, however, that in the event that such Person
described in this clause (iii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (iii), such Person nonetheless shall become
an Acquiring Person in the event such Person, together with all Affiliates and
Associates of such Person, thereafter acquires Beneficial Ownership of any
additional Common Shares unless the
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acquisition of such Beneficial Ownership would not result in such Person
becoming an Acquiring Person by reason of subclause (A) or (B) of this clause
(iii). Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith (upon the affirmative vote of a majority of the
Continuing Directors) that a Person who would otherwise be an Acquiring Person,
as defined pursuant to the foregoing provisions of this paragraph (a), is
eligible to file and did file a Schedule 13G and such Person divests (and/or
causes such Person's Affiliates and/or Associates to divest) as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purpose of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "Beneficially Own," and have "Beneficial Ownership" of,
any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly,
for purposes of Section 13(d) of the Exchange Act and Rule 13d-3
thereunder (or any comparable or successor law or regulation);
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time or
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona
fide public offering of securities of the Company), or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed pursuant to this Section 1(c)(ii)(A) to be
the Beneficial Owner of, or to Beneficially Own, (1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or (2)
securities which a Person or any of such Person's Affiliates or
Associates may be deemed to have the right to acquire pursuant to any
merger or other acquisition agreement between the Company and such
Person (or one or more of such Person's Affiliates or Associates) if
such agreement has been approved by the Board of Directors of the
Company, upon the affirmative vote of a majority of the Continuing
Directors, prior to there being an Acquiring Person; or (B) the right
to vote alone or in concert with others pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, any
security pursuant to this Section 1(c)(ii)(B) if the agreement,
arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any
2.
<PAGE> 6
comparable or successor report) other than by reference to a proxy or
consent solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities by the Company)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, (x) the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued and outstanding together
with the number of such securities not then actually issued and outstanding
which such Person would be deemed to own beneficially hereunder, (y) for
purposes of determining Beneficial Ownership, officers and directors of the
Company solely by reason of their status as such shall not constitute a group
(notwithstanding that they may be Associates of one another or may be deemed to
constitute a group for purposes of Section 13(d) of the Exchange Act) and shall
not be deemed to own shares owned by another officer or director of the
Company.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in the State of
California are authorized or obligated by law or executive order to close.
(e) "Company" shall have the meaning set forth in the
first paragraph at the beginning of this Agreement.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Irvine, California time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Irvine, California time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Company shall mean shares of common stock, par value $0.0001 per share, of the
Company. "Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock with the greatest voting power, or the
equity securities or other equity interest having power to control or direct
the management of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iv) hereof.
(i) "Continuing Director" shall mean any person who is a
member of the Board of Directors of the Company, while such person is a member
of the Board of Directors, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a
3.
<PAGE> 7
representative, nominee or agent of an Acquiring Person or of any such
Affiliate or Associate, and who either (i) was a member of the Board of
Directors prior to the time that any Person became an Acquiring Person or (ii)
who subsequently became a member of the Board of Directors and who, while such
person is a member of the Board of Directors, is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative, nominee or
agent of an Acquiring Person or of any such Affiliate or Associate, if such
Person's nomination for election or such Person's election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors
then on the Board of Directors.
(j) "Current Per Share Market Price" shall have the
meaning set forth in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in
Section 11(a)(iv).
(l) "Distribution Date" shall have the meaning set forth
in Section 3 hereof.
(m) "Equivalent Preferred Shares" shall have the meaning
set forth in Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, as in effect on the date of this Agreement.
(o) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(p) "Issuer" shall have the meaning set forth in Section
13 hereof.
(q) "Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
(r) "Preferred Shares" shall mean shares of Series A
Junior Participating Preferred Stock of the Company, par value $0.0001 per
share, having the rights and preferences set forth in the Form of Certificate
of Designation attached to this Agreement as Exhibit A.
(s) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(t) "Record Date" shall have the meaning set forth in the
second paragraph at the beginning of this Agreement.
(u) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(v) "Redemption Price" shall have the meaning set forth
in Section 23 hereof.
(w) "Right" shall have the meaning set forth in the
second paragraph at the beginning of this Agreement.
4.
<PAGE> 8
(x) "Right Certificate" shall have the meaning set forth
in Section 3 hereof.
(y) "Rights Agent" shall have the meaning set forth in
the first paragraph at the beginning of this Agreement.
(z) "Securities Act" shall mean the Securities Act of
1933, as amended.
(aa) "Shares Acquisition Date" shall mean the earlier of
(i) the first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such, or (ii) the date on which a majority of
the Continuing Directors, in good faith, informs the Company by written notice
of the existence of an Acquiring Person.
(ab) "Spread" shall have the meaning set forth in Section
11(a)(iv) hereof.
(ac) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(ad) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iv) hereof.
(ae) "Summary of Rights" shall have the meaning set forth
in Section 3 hereof.
(af) "Trading Day" shall have the meaning set forth in
Section 11 hereof.
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 hereof, shall, prior
to the Distribution Date, also be the holders of Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the Close of Business on the tenth Business Day (or such later
date as the Board of Directors shall determine upon the affirmative vote of a
majority of the Continuing Directors then in office) after the Shares
Acquisition Date or (ii) the tenth Business Day (or such later date as the
Board of Directors shall determine, upon the affirmative vote of a majority of
the Continuing Directors then in office) after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any Person
holding Common Shares for or pursuant to the terms of any such plan) of, or of
the first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person holding Common Shares
for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would
5.
<PAGE> 9
result in any Person becoming the Beneficial Owner of Common Shares aggregating
15% or more of the then outstanding Common Shares (the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will notify the Rights
Agent thereof and the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each Common Share so held,
subject to adjustment as provided for herein. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company or the Rights Agent will send a copy of a Summary of
Rights to Purchase Preferred Shares, in substantially the form of Exhibit C
hereto (the "Summary of Rights"), by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Unless the Board of Directors by resolution adopted
at or before the time of issuance of any Common Shares specifies to the
contrary, Rights shall be issued in respect of all Common Shares that are
issued after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date. Certificates
representing such Common Shares shall also be deemed to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
CorVel Corporation and U.S. Stock Transfer Corporation dated
as of February 11, 1997 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of
CorVel Corporation. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. CorVel Corporation will mail to the holder of
this certificate a copy of the Rights
6.
<PAGE> 10
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to any Person who is, was or
becomes an Acquiring Person (or any Affiliate or Associate
thereof) (as defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date, or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed cancelled
and retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of assignment,
certification and election to purchase Preferred Shares to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates whenever distributed, shall be dated as of the Record Date
(or in the case of Rights issued with respect to Common Shares issued by the
Company after the Record Date, as of the date of issuance of such Common Stock)
and on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights Beneficially Owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined
7.
<PAGE> 11
is part of a plan, arrangement or understanding which has as a primary purpose
or effect avoidance of Section 11(a)(ii) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in the
Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President, any of its Vice
Presidents, or its Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Company's seal, if any, or a facsimile thereof, and
shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(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
and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or other securities or
property) as the Right Certificate or Right Certificates surrendered then
entitled
8.
<PAGE> 12
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent with the form of
certification and assignment on the reverse side thereof duly endorsed (or
enclosed with such Rights Certificate a written instrument of transfer in 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. Thereupon the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental 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, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Sections 23(b) and 24(c) hereof, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on February 10, 2007 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the "Redemption Date"), (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof, or (iv) the consummation
of any merger or other acquisition involving the Company pursuant to an
agreement described in Section 1(c)(ii)(A)(2) hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share in connection with the exercise of a Right shall initially be
$125, shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of
a Right Certificate representing exercisable Rights, with the form of
certification and election to purchase duly executed, accompanied by payment of
the Purchase Price for the number of one one-hundredths of a Preferred Share
(or other security or property, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder
of such Right
9.
<PAGE> 13
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
one one-hundredths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) requisition from a depositary agent properly appointed by the Company
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iii) after receipt
of such certificates 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)
when appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the case of a purchase of
securities, other than Preferred Shares, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (iv) of this
Section 7(c). In the event that the Company is obligated to issue other
securities of the Company, and/or distribute other property or consideration as
provided for herein, the Company shall make all arrangements necessary so that
such other securities, and/or property or other consideration are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) 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 form of certification and
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or 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 Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof.
10.
<PAGE> 14
The Rights Agent shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its
best efforts to 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, or any Preferred Shares held in its treasury (and,
following the occurrence of an event described in Section 11(a)(ii) or Section
13(a), out of its authorized and unissued shares of Common Stock and/or other
securities), the number of Preferred Shares (and, following the occurrence of
any such event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) If the Preferred Shares (or, following the occurrence
of an event described in Section 11(a)(ii) or Section 13(a), the Common Shares
and/or other securities) are at any time listed on a national securities
exchange or included for quotation on any transaction reporting system, then so
long as the Preferred Shares (and, following the occurrence of any such event
described in Section 11(a)(ii) or Section 13(a), the Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange or included for quotation on any such transaction reporting
system, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange or included for quotation on any
such transaction reporting system upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file,
as soon as practicable following the earliest date after the first occurrence
of an event described in Section 11(a)(ii) in which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iv) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities or (B) the date of expiration of the Rights. The Company may
temporarily suspend, for a period not to exceed ninety (90) days after the date
set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the Rights Agent,
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement and notification to the Rights Agent at such time as
the suspension is no longer in effect. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction, unless the
11.
<PAGE> 15
requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available and until a registration statement has
been declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or delivery of
the Right Certificates or of any Preferred Shares upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or
to issue or to deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for Preferred Shares is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price therefor (and any applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder
of Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of Preferred Shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation),
12.
<PAGE> 16
then, in each such event, except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or reclassification,
and the number and kind of shares issuable upon the exercise of such Rights,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Shares transfer books of
the Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right. 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) Subject to Section 24 of this Agreement, in
the event that any Person becomes an Acquiring Person, each holder of a Right
shall thereafter have the right to receive for each Right, upon exercise
thereof, at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of a
number of one one-hundredths of a Preferred Share, such number of Common Shares
of the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable and dividing that product by (y) 50% of
the then Current Per Share Market Price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.
Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of an event in which any Person shall
become an Acquiring Person, any Rights beneficially owned by (A) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (B) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (C) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (1) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Board of Directors, upon the affirmative
vote of a majority of the Continuing Directors, has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 11(a)(ii), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. No Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any
13.
<PAGE> 17
Associate or Affiliate thereof or to any nominee or agent of such Acquiring
Person, Associate or Affiliate; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee or agent of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled.
The Company shall use all reasonable efforts to ensure that
the provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.
(iii) The right to buy Common Shares of the Company
pursuant to Section 11(a)(ii) hereof, (a) shall not arise if the event causing
such Person to become an Acquiring Person (A) is a consolidation, merger, sale,
transfer or similar transaction subject to Section 13 hereof, or (B) is an
acquisition of shares of Common Shares pursuant to a tender offer or an exchange
offer for all outstanding Common Shares at a price and on terms determined by
the Board of Directors, upon the affirmative vote of a majority of the
Continuing Directors, and after receiving advice from one or more investment
banking firms, to be (1) at a price which is fair to stockholders (taking into
account all factors which such members of the Board of Directors deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold in an orderly basis designed to realize maximum
stockholder value) and (2) otherwise in the best interests of the Company and
its stockholders.
(iv) In lieu of issuing Common Shares in
accordance with Section 11(a)(ii) hereof, the Company may, if the Board of
Directors of the Company, upon the affirmative vote of a majority of the
Continuing Directors, determines that such action is necessary or appropriate
and not contrary to the interest of holders of Rights (and/or in the event that
the number of Common Shares 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 are not sufficient to permit the exercise in
full of the Rights, or if any necessary regulatory approval for such issuance
has not been obtained by the Company), the Company shall: (A) determine the
excess of (1) the value of the Common Shares issuable upon the exercise of a
Right (determined as provided in the last sentence of this subclause (iv),
hereinafter referred to as the "Current Value") over (2) the Purchase Price
(such excess being referred to as the "Spread") and (B) with respect to each
Right, make adequate provision to substitute for such Common Shares, upon
exercise of the Rights, (1) cash, (2) a reduction in the Purchase Price, (3)
other equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred stock which the Board of Directors of
the Company, upon the affirmative vote of a majority of the Continuing
Directors, has deemed to have the same value as Common Shares (such shares or
units of shares of preferred stock are herein called "Common Stock
Equivalents")), except to the extent the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt securities of the
Company, except to the extent that the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (5) other assets or (6)
any combination of the foregoing,
14.
<PAGE> 18
having an aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, based upon the
advice of a nationally recognized investment banking firm selected by the Board
of Directors of the Company, upon the affirmative vote of a majority of the
Continuing Directors; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the occurrence of an event described in Section 11(a)(ii),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance,
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, shall determine in
good faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the thirty
(30) day period set forth above may be extended to the extent necessary, but
not more than ninety (90) days after the occurrence of an event described in
Section 11(a)(ii), in order that the Company may seek stockholder approval for
the authorization of such additional shares or take action to obtain such
regulatory approval (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iv),
the Company (x) shall provide that such action shall apply uniformly to all
outstanding Rights held by holders entitled to receive Common Shares or other
securities or property upon exercise of such 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, to take any action to
obtain any required regulatory approval 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 and shall promptly notify the Rights Agent of
such suspension. For purposes of this Section 11(a)(iv), the value of the
Common Shares shall be the Current Per Share Market Price (as determined
pursuant to Section 11(d) hereof) of the Common Shares at the Close of Business
on the date of the occurrence of one of the events described in Section
11(a)(ii) and the value of any Common Stock Equivalent shall be deemed to have
the same value as the Common Shares on such date.
(b) In the event that the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the Preferred
Shares ("Equivalent Preferred Shares")) or securities convertible into
Preferred Shares or Equivalent Preferred Shares at a price per Preferred Share
or Equivalent Preferred Share (or having a conversion price per share, if a
security convertible into Preferred Shares or Equivalent Preferred Shares) less
than the then Current Per Share Market Price of the Preferred Shares (as
defined in Section 11(d)) on such record date, then, in each such case, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect
15.
<PAGE> 19
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or Equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record
date plus the number of additional Preferred Shares and/or Equivalent Preferred
Shares 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 in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, 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. Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then Current Per Share Market Price of the
Preferred Shares on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, upon the affirmative
vote of a majority of the Continuing Directors, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such Current Per Share Market Price of the
Preferred Shares; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the Preferred Shares. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "Current Per Share Market Price" of any security on any date shall be
deemed to be the average of the daily closing prices per share of such security
for the thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Current Per Share Market Price of the security is determined during a
period following the announcement by the Issuer of such security of (A) a
dividend or distribution on such security payable in shares of such security or
securities convertible into such shares, or (B) any
16.
<PAGE> 20
subdivision, combination or reclassification of such security and prior to the
expiration of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the Current Per Share Market
Price shall be appropriately adjusted to reflect the current market price per
share equivalent of such security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the National Association
of Securities Dealers, Inc. Automated Quotation System/National Market System
("NASDAQ/NMS"), if the security is not listed or admitted to trading on the
NASDAQ/NMS, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the security is listed or admitted to trading or, if the
security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ/NMS or such other system then in use, or, if on any such date the
security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the security selected by the Board of Directors of the Company, upon approval
by a majority of the Continuing Directors. If on any such date no market maker
is making a market in the security, the "Current Per Share Market Price" of
such security on such date as determined in good faith by the Board of
Directors of the Company as provided for above shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the security is listed or admitted to trading is open for the
transaction of business or, if the security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "Current Per Share Market Price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "Current Per Share Market Price"
of the Preferred Shares shall be conclusively deemed to be the Current Per
Share Market Price of the Common Shares as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by 100. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "Current Per Share Market Price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
upon the affirmative vote of a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
17.
<PAGE> 21
which requires such adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a Preferred Share 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 Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at
18.
<PAGE> 22
the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase Price and the number
of one one-hundredths of a Preferred 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 one one-hundredth of the par
value, if any, of the Preferred Shares issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date of the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
19.
<PAGE> 23
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or
consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in Sections 11
and 13 hereof, the Company shall promptly (a) prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the failure by the
Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) Except as provided in Section 13(b) hereof, in the
event, directly or indirectly, (1) the Company shall consolidate with, or merge
with and into, any other Person, (2) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (3) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, directly or indirectly,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person
other than the Company or one or more of its wholly-owned Subsidiaries, then,
and in each such case, proper provision shall be made so that (i) each holder
of a Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of fully
paid and non-assessable Common Shares of such other Person (including the
Company as successor thereto or as the surviving corporation in any such
consolidation, merger, sale or transfer), free of any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is
20.
<PAGE> 24
then exercisable and dividing that product by (B) 50% of the then Current Per
Share Market Price of the Common Shares of such other Person (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Issuer of such Common Shares
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Issuer; and (iv) such Issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights, and the
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such Issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or other arrangements
of any kind whatsoever which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to
be afforded by the Rights. The provisions of this Section 13 shall similarly
apply to each successive merger, consolidation, sale or transfer.
The supplemental agreement referred to above in this Section
13(a) to be entered into by the Company, Issuer and Rights Agent shall also
provide that, as soon as practicable after the date of any of the events
described in Section 13(a), such Issuer shall:
(i) prepare and file a registration statement
under the Securities Act 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 Final Expiration
Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on the NASDAQ/NMS; and
(iii) deliver to holders of the Rights historical
financial statements for such Issuer which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(b) In the event of any merger or other acquisition
transaction involving the Company pursuant to an agreement described in Section
1(c)(ii)(A)(2), the provisions of Section 13(a) hereof shall not be applicable
to such transaction and this Rights Agreement and the rights of holders of
Rights hereunder shall be terminated in accordance with Section 7(a) hereof.
(c) The term "Issuer," for purposes of this Section 13,
shall refer to the Person (or the Affiliate or Associate of such Person)
referred to in Section 13(a); provided,
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however, that (i) if such Person (or the Affiliate or Associate of such Person)
is a direct or indirect Subsidiary of another Person, the term "Issuer" shall
refer to such other Person, and (ii) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the term "Issuer" shall refer
to whichever of such Person or Persons is the Issuer of Common Shares having
the greatest aggregate value.
(d) If, for any reason, the Rights cannot be exercised
for Common Shares of such Issuer as provided in Section 13(a), then each holder
of Rights shall have the right to exchange its Rights (without payment of the
Purchase Price) for cash from such Issuer in an amount equal to the product of
(A) 1/2 of the number of Common Shares of the Issuer that it would otherwise be
entitled to purchase pursuant to Section 13(a) hereof multiplied by (B) the
Current Per Share Market Price, as determined pursuant to Section 11(d) hereof,
of such Common Shares of such Issuer. If, for any reason, the foregoing
provision cannot be applied to determine the cash amount into which the Rights
are exchangeable, then the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, based upon the
advice of one or more nationally recognized investment banking firms, shall
determine such amount reasonably and in good faith. Any such determination
shall be final and binding on the Rights Agent and the holders of Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NASDAQ/NMS or, if the Rights are not listed or admitted to
trading on the NASDAQ/NMS, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported
by the NASDAQ/NMS or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company, upon approval by
a majority of the Continuing Directors. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Company, upon
approval by a majority of the Continuing Directors, shall be used.
22.
<PAGE> 26
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share 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, however, 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 Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share. For the purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of
a Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
23.
<PAGE> 27
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) subject to Sections 6 and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the execution, acceptance and administration of
this Agreement and the exercise and performance hereunder of its duties,
including the costs and expenses of defending against and appealing any claim
of liability in the premises.
24.
<PAGE> 28
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 and the exercise and
performance of its duties hereunder in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust 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 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations 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 of
its choice (who may be legal counsel for the Company), and the reasonable
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken, suffered or omitted by it in good
faith and in accordance with such opinion.
25.
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(b) Whenever in the administration, exercise and
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, suffering or omitting 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, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the 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, suffered or
omitted in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith or willful
misconduct. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the legality, validity or enforceability
or the execution of any Right Certificate (except its countersignature
thereof); nor shall it be liable or 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 (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of the certificate described in Section 12 hereof);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the administration, exercise and
performance of its duties hereunder from any
26.
<PAGE> 30
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be responsible or liable for any action taken, suffered or omitted
by it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions. Any application by
the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or omission of,
the Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be
less than five (5) Business Days after the date any officer of the Company
actually received such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise, transfer, split up, combination or exchange,
the certification on the form of assignment or form of election to purchase, as
the case may be, that the Rights evidenced by the Right Certificate are not
owned by an Acquiring Person, or an Affiliate or Associate thereof, has either
not been completed or in any manner indicates any other response thereto, the
Rights Agent shall not take any further action with respect to such requested
exercise, transfer, split up, combination or exchange, 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 thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares or Preferred Shares (as to
which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof to the holders of the
Right Certificates
27.
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by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares or Preferred Shares (as to which the Rights Agent has
received prior written notice) by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state of the United States so long as such corporation is authorized to
do business as a banking institution, is in good standing, and is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors,
upon the affirmative vote of a majority of the Continuing Directors, to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to Common Shares so issued or sold pursuant
to the exercise of stock options or under any employee benefit plan or
arrangement or upon the exercise, conversion or exchange of securities of the
Company currently outstanding or issued at any time in the future by the
Company and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, upon the affirmative vote of a majority
of the Continuing Directors, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued and this
sentence shall be null and void ab initio if, and to the extent that, such
28.
<PAGE> 32
issuance or this sentence would create a significant risk of or result in
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued or would create a significant risk of or
result in such options' or employee plans' or arrangements' failing to qualify
for otherwise available special tax treatment and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Company may, at its option, upon the affirmative
vote of a majority of the Continuing Directors, at any time prior to the Close
of Business on the earlier of (i) the tenth day following the Shares
Acquisition Date or such later date as may be determined by the affirmative
vote of a majority of the Continuing Directors and publicly announced by the
Company, or (ii) the Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price either in cash, Common Shares (based on the
Current Per Share Market Price thereof (as determined pursuant to Section 11(d)
hereof) at the time of redemption), or any other form of consideration deemed
appropriate by the Board of Directors, upon the affirmative vote of a majority
of Continuing Directors. The redemption of the Rights by the Board of
Directors may be made effective at such time on such basis and with such
conditions as the Board of Directors in its sole discretion may establish;
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights on or after the time a Person becomes an Acquiring
Person, then there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such Continuing
Directors.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to paragraph (a)
of this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within ten (10) 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 shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
29.
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Section 24. Exchange.
(a) Notwithstanding any other provision herein to the
contrary, the Company, at its option, upon the affirmative vote of a majority
of the Continuing Directors, at any time after any Person becomes an Acquiring
Person, may exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for (i) Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (the "Exchange Shares") or (ii) Substitute Consideration (as that term
is defined below). The Board of Directors, upon the affirmative vote of a
majority of the Continuing Directors may determine, in its sole discretion,
whether to deliver Exchange Shares or Substitute Consideration.
(b) In the event the Board of Directors shall determine
to deliver Substitute Consideration in exchange for Rights, the Company shall
(1) determine the value of the Exchange Shares (the "Exchange Value"), and (2)
with respect to each Right to be exchanged, make adequate provision to
substitute for Exchange Shares the following (the "Substitute Consideration"):
(v) cash, (w) Common Stock or Common Stock Equivalents (as that term is defined
in Section 11(a)(iii) hereof) or Preferred Shares or Equivalent Preferred Stock
(as that term is defined in Section 11(b) hereof), (x) debt securities of the
Company, (y) other assets, or (z) any combination of the foregoing, having an
aggregate value equal to the Exchange Value, where such aggregate value has
been determined by the Board of Directors of the Company, upon the affirmative
vote of a majority of the Continuing Directors based upon the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company. For purposes of this Section 24(b), the value of the
Common Shares shall be the Current Per Share Market Price (as determined
pursuant to Section 11(d) hereof) on the day that is the later of (x) the first
occurrence of an event described in Section 11(a)(ii) hereof and (y) the date
on which the Company's right of redemption pursuant to Section 24(a) expires;
and the value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Shares on such date.
(c) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to this Section 24,
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive Exchange Shares or Substitute Consideration for each
Right exchanged by such holder. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last address 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 Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
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(d) In the event that there shall not be sufficient
shares of Common Stock or Preferred 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 shall take all such action as may
be necessary to authorize additional shares of Common Stock or Preferred Stock
for issuance upon exchange of the Rights. Notwithstanding anything else set
forth in this Section 24, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares of the Company
then outstanding.
(e) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (e), the current market value of a whole Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
(f) The Company may, at its option, by majority vote of
the Board of Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and in good faith by
the Board of Directors, based upon the advice of one or more nationally
recognized investment banking firms.
(g) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection (f) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection (f)
above. The Company shall give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Shares
of the Company. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Rights
will be effected.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares
or to make any other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional
31.
<PAGE> 35
Preferred Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action referred to above, at
least ten (10) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof. In the event any Person becomes an Acquiring
Person, the Company will promptly notify the Rights Agent thereof.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
CorVel Corporation
1920 Main Street
Suite 1090
Irvine, CA 92714
Attention: V. Gordon Clemons
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
32.
<PAGE> 36
U.S. Stock Transfer Corporation
1745 Gardena Avenue
Glendale, California 91204-2891
Attention: Richard C. Brown
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Company may supplement or amend this Agreement in any
respect, including, without limitation, any amendment to change the Purchase
Price, without the approval of any holders of Rights, by action of its Board of
Directors upon approval by a majority of the Continuing Directors, and the
Rights Agent shall, if the Company so directs, execute such supplement or
amendment. From and after the Distribution Date, the Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights, by action of its Board of Directors, upon the affirmative vote of a
majority of the Continuing Directors, in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to change or supplement any
other provisions with respect to the Rights which the Company may deem
necessary or desirable and which shall be consistent with, and for the purpose
of fulfilling, the objectives of the Board of Directors in adopting this
Agreement, including, without limitation, to change the Purchase Price, the
Redemption Price, any time periods herein specified, and any other term hereof,
any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that from and after the
Distribution Date, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights. Upon receipt of
a certificate from an appropriate officer of the Company that the proposed
supplement or amendment is consistent with this Section 27 and, after the
Distribution Date, that the proposed supplement or amendment does not adversely
affect the interests of the holders of Rights, the Rights Agent shall execute
such supplement or amendment. Without limiting the foregoing, the Company may
at any time prior to the Distribution Date, by action of its Board of
Directors, upon the affirmative vote of a majority of the Continuing Directors,
amend this Agreement to lower the thresholds set forth in Sections 1(a) and
3(a) to not less than the greater of (i) any percentage greater than the
largest percentage of the outstanding Common Shares then known by the Company
to be beneficially owned by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any Subsidiary of
the Company, any entity holding Common Shares for or pursuant to the terms of
any such plan, or Americable) and (ii) 10%.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
33.
<PAGE> 37
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of
which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d- 3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (and, where
specifically provided for herein, only upon the affirmative vote of a majority
of the Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or 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 the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing), which are done or made by the Board (or, where
specifically provided for herein, upon approval by a majority of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all other
parties and (y) not subject the Board or the Continuing Directors to any
liability to the holders of the Rights.
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 Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void
or unenforceable and the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the tenth business day following the date of such determination by
the Board of Directors of the Company.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
34.
<PAGE> 38
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted or convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
35.
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
U.S. STOCK TRANSFER CORPORATION: CORVEL CORPORATION
By /s/ RICHARD C. BROWN By /s/ V. GORDON CLEMONS
------------------------------ ---------------------------
Name: Richard C. Brown Name: V. Gordon Clemons
Title: Vice President Title: Chief Executive Officer
and President
ATTEST:
By /s/ ENRIQUE ARTAZA By /s/ RICHARD J. SCHWEPPE
------------------------------ ---------------------------
Name: Enrique Artaza Name: Richard J. Schweppe
Title: Vice President Title: Chief Financial Officer
36.
<PAGE> 40
EXHIBIT A
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CORVEL CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
__________________________________
CorVel Corporation, 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 at a
meeting of the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law on February 11, 1997:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $0.0001 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 initially constituting the Series A
Preferred Stock shall be 60,000. 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.
37.
<PAGE> 41
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 shares of the
Common Stock, par value $0.0001 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 last 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 (i) $1.00 in cash, or (ii) 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 after February 28, 1997 (the "Declaration Date"),
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, then in each such
38.
<PAGE> 42
case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the preceding subclause (ii)
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 2 immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided
that, if no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
succeeding Quarterly Dividend Payment Date, a dividend of $1.00 per share
payable in cash on the Series A Preferred Stock shall nevertheless accrue and be
cumulative on the outstanding shares of Series A Preferred Stock as provided in
(C) of this Section 2.
(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 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
39.
<PAGE> 43
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 after the
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) 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 shares of
40.
<PAGE> 44
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, 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.
Section 4. Certain Restrictions.
(A) The Corporation shall not declare any dividend on,
make any distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a share or
fraction of a share of Series A Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Preferred Stock as required by Section
2 hereof.
(B) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
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 a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are
41.
<PAGE> 45
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.
(C) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under 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 cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of
42.
<PAGE> 46
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 (A) to the holders of shares of stock ranking junior (either as to
dividends or as to amounts payable 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 an amount per share (rounded to the
nearest cent) equal to the greater of (i) $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, or (ii) 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, plus an amount equal to accrued and unpaid dividends and
distributions on the Series A Preferred Stock whether or not declared, to the
date of such payment or (B) to the holders of shares of stock ranking on a
parity (either as to dividends or as to amounts payable 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) 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 (A)(ii) 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 and/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 and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare after the Declaration
Date or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise) 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 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.
43.
<PAGE> 47
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, unless the
terms of such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation on this day of February 28, 1997.
--------------------------------
Name: V. Gordon Clemons
Title: Chief Executive Officer
and President
ATTEST:
- -----------------------------------
Name: Richard J. Schweppe
Title: Chief Financial Officer
44.
<PAGE> 48
EXHIBIT B
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 10, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT THE OPTION OF THE COMPANY AT $0.01 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SUCH
AGREEMENT.]*/
Right Certificate
CORVEL CORPORATION
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 11,
1997 (the "Rights Agreement"), between CorVel Corporation, a Delaware
corporation (the "Company"), and U.S. Stock Transfer Corporation (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.,
Irvine, California time, on February 10, 2007, at the principal office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of Series
A Junior
__________________________
*/ The portion of the legend in bracket shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
<PAGE> 49
Participating Preferred Stock, par value $0.001 per share (the "Preferred
Shares") of the Company, at a purchase price of $125 per one one-hundredth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share 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 February 11, 1997, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-hundredths of a Preferred Share 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.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the principal office of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Preferred Shares as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company, at its
option, at a redemption price of $0.01 per Right or (ii) may be exchanged by
the Company in whole or in part for Preferred Shares, shares of the Company's
Common Stock, or substantially equivalent rights or other consideration as
determined by the Company.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares or of any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other
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<PAGE> 50
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company
and its corporate seal. Dated as of __________, 19__.
[SEAL]
ATTEST: CORVEL CORPORATION
By: By:
------------------------------------- ---------------------------------
Its: Its:
------------------------------------ --------------------------------
Countersigned:
, as Rights Agent
- -----------------------------------------
By:
-------------------------------------
Authorized Signature
Its:
------------------------------------
Title
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<PAGE> 51
[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)
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.
- --------------------------------------------------------------------------------
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------------
Signature
Form of Reverse Side of Right Certificate -- continued
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<PAGE> 52
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To CORVEL CORPORATION
The undersigned hereby irrevocably elects to exercise____________ Rights
represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security or other identifying number: ____________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number: ____________________
________________________________________________________________________________
(Please print name and address)
Dated: __________________, _____
________________________________________
Signature
Signature Guaranteed:
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.
Form of Reverse Side of Right Certificate -- continued
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<PAGE> 53
- --------------------------------------------------------------------------------
CERTIFICATION
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________________________
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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<PAGE> 54
Exhibit C
CORVEL CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 11, 1997, the Board of Directors of CorVel
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock, par value $0.0001
per share (the "Common Shares"), of the Company. The dividend is payable on
February 28, 1997 (the "Record Date") to stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $0.0001 per share (the "Preferred Shares"), of the Company at a price of
$125 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated as of February 11, 1997 (the "Rights Agreement") between
the Company and U.S. Stock Transfer Corporation, as Rights Agent (the "Rights
Agent") and are summarized below.
Until the earlier to occur of (i) 10 days following the date
of public announcement by the Company or an Acquiring Person that any person or
group of affiliated or associated persons have become an Acquiring Person (as
such term is defined below), (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors prior to such time as any
person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of associated persons of 15% or more of the Company's outstanding Common
Shares, or (iii) 10 days following the date on which a majority of the
Continuing Directors (as such term is defined in the Rights Agreement), in good
faith, informs the Company by written notice of the existence of an Acquiring
Person (the earliest of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto.
"Acquiring Person" shall mean any person who or which, together
with all affiliates and associates of such person is the Beneficial Owner of 15%
or more of the Common Shares of the Company then outstanding, but shall not
include (i) the Company, any subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any person holding
Common Shares for or pursuant to the terms of any such plan, (ii) Americable,
Inc., a Minnesota corporation ("Americable") and wholly-owned subsidiary of
ENStar Inc., a Minnesota corporation ("ENStar"), or any affiliates and associate
of Americable including ENStar (but only to the extent that Americable and its
associates and affiliates beneficially own less than 33% of the Common Shares of
the Company); or (iii) any person, together with all affiliates and associates
of such person, who or which would be an Acquiring Person solely by
reason of (A)
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<PAGE> 55
being the beneficial owner of Common Shares, the beneficial ownership of which
was acquired by such person (and the affiliates and associates of such person)
pursuant to any action or transaction, or series of related actions or
transactions, approved by the Board of Directors of the Company, upon the
affirmative vote of a majority of the Continuing Directors, prior to the
earlier to occur of (1) the Distribution Date or (2) any exchange made pursuant
to the Rights Agreement, or (B), a reduction in the number of issued and
outstanding Common Shares pursuant to a transaction or series of related
transactions approved by the Board of Directors, upon the affirmative vote of a
majority of the Continuing Directors; provided further that in the event that
such person described in clause (iii) above does not become an Acquiring Person
by reason of clause (A) or (B), such person nonetheless shall become an
Acquiring Person in the event such person, together with all affiliates and
associates of such person, thereafter acquires beneficial ownership of any
additional Common Shares unless the acquisition of such beneficial ownership
would not result in such person becoming an Acquiring Person by reason of
subclause (A) or (B) of clause (iii) above. Notwithstanding the foregoing, if
the Board of Directors of the Company determines (upon the affirmative vote of
a majority of the Continuing Directors) in good faith that a person who would
otherwise be an Acquiring Person is eligible to file and did file a Schedule
13G and such person divests (and/or causes such person's affiliates and/or
associates to divest) as promptly as practicable a sufficient number of Common
Shares so that such person would no longer be an Acquiring Person as defined
pursuant to the foregoing provisions, then such person shall not be deemed to
be an "Acquiring Person" for purposes of the Rights Agreement.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the Close of Business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on February 10, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable upon exercise of, or in exchange for,
the Rights are subject to adjustment
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<PAGE> 56
from time to time to prevent dilution in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Shares. The
number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to receive on the
last day of March, June, September and December an amount per share (rounded to
the nearest cent) equal to the greater of (i) $1.00 in cash or (ii) an
aggregate dividend of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to
receive an amount per share equal to the greater of (i) $100 per share or (ii)
an aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that, after the Rights become exercisable, the
Company is acquired in a merger or other business combination transaction with
any person or an affiliate thereof, or 50% or more of its consolidated assets
or earning power are sold to any person or an affiliate thereof, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon exercise thereof at the then current Purchase Price of
the Right, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
Purchase Price of the Right.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Common Shares of the Company (or
cash, other securities or property) having a market value of two times the
Purchase Price of the Right.
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Company may, upon the
affirmative vote of a majority of the Continuing Directors, exchange the Rights
(other than Rights owned by such person or group which have become void), in
whole or in part for Common Shares, Preferred Shares or other consideration
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<PAGE> 57
(or fractions or combinations thereof), at an exchange ratio of one Common
Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading day prior
to the date of exercise.
At any time prior to the earliest of (i) the expiration of 10
business days following the Shares Acquisition Date (as such term is defined in
the Rights Agreement) (or such later publicly announced date determined by the
affirmative vote of a majority of the Continuing Directors) or (ii) the Final
Expiration Date, the Company may, upon the affirmative vote of a majority of
the Continuing Directors, redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). The redemption of the rights
may be made effective at such time on such basis and with such conditions as
the Board, upon the affirmative vote of a majority of the Continuing Directors,
in its sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price. The Rights are
also redeemable under other circumstances as specified in the Rights Agreement.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights upon
the affirmative vote a majority of the Continuing Directors, including an
amendment to lower certain thresholds. From and after such time as any person
becomes an Acquiring Person, no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
no right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available to holders of a Common
Share free of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference
to the Rights Agreement, which is hereby incorporated herein by reference.
C-4
