SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 11, 1999
Medaphis Corporation
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(Exact name of registrant as specified in its charter)
Delaware 000-19480 58-1651222
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2700 Cumberland Parkway, Suite 300, Atlanta Georgia 19044
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (770) 444-5300
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
The Board of Directors of Medaphis Corporation (the "Company")
has declared a dividend distribution of one Right for each outstanding
share of Common Stock, par value $.01 per share, of the Company ("Common
Stock"). The distribution is payable to the stockholders of record at the
close of business on February 16, 1999. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of a
series of the Company's preferred stock designated as Series A Junior
Participating Preferred Stock ("Preferred Stock") at a price of $25 per one
one-hundredth of a 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, 1999 (the "Rights Agreement"), between
the Company and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock other
than as a result of repurchases of stock by the Company or certain
inadvertent actions by institutional or certain other stockholders or the
date a Person has entered into an agreement or arrangement with the Company
or any Subsidiary of the Company providing for an Acquisition Transaction
(the "Stock Acquisition Date") or (ii) 10 business days (or such later date
as the Board shall determine, provided, however, that no deferral of a
Distribution Date by the Board pursuant to the terms of the Rights
Agreement described in this clause (ii) may be made at any time during the
Special Period (as defined below)) following the commencement of a tender
offer or exchange offer that would result in a person or group becoming an
Acquiring Person. An Acquisition Transaction is defined in the Rights
Agreement as (x) a merger, consolidation or similar transaction involving
the Company or any of its Subsidiaries as a result of which stockholders of
the Company will no longer own a majority of the outstanding shares of
Common Stock of the Company or a publicly traded entity which controls the
Company or, if appropriate, the entity into which the Company may be
merged, consolidated or otherwise combined (based solely on the shares of
Common Stock received or retained by such stockholder, in its capacity as a
stockholder of the Company, pursuant to such transaction), (y) a purchase
or other acquisition of all or a substantial portion of the assets of the
Company and its Subsidiaries, or (z) a purchase or other acquisition of
securities representing 15% or more of the shares of Common Stock then
outstanding. Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with
such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute the transfer
of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering Event (as defined
below) that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. (Atlanta, Georgia time) on February 16, 2009,
unless earlier redeemed, exchanged, extended or terminated by the Company
as described below. At no time will the rights have any voting power.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders,
after receiving advice from one or more investment banking firms (a
"Qualifying Offer"), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
In the event that (i) the Company is acquired in a merger (other
than a "clean-up" merger which follows a Qualifying Offer) or other
business combination transaction (x) in which the Company is not the
surviving entity, (y) in which the Company is the surviving entity and the
Common Stock is changed or exchanged or the Common Stock remains
outstanding but constitutes less than 50% of the shares outstanding
immediately following the merger, or (ii) 50% or more of the Company's
assets or earning power is transferred, each holder of a Right (except
Rights which have previously been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of
the Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
At any time after a person becomes an Acquiring Person and prior
to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding Common Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole
or in part, at an exchange ratio of one share of Common Stock, or one one-
hundredth of a share of Preferred Stock (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
At any time until ten business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors).
For 180 days (the "Special Period") following a change in control
of the Board of Directors of the Company, that has not been approved by the
Board of Directors, occurring within six months of an unsolicited third
party acquisition or business combination proposal, the new directors are
entitled to redeem the rights (assuming the rights would have otherwise
been redeemable), including to facilitate an acquisition or business
combination transaction involving the Company in accordance with the terms
set forth in the Rights Agreement.
Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common
Stock (or other consideration) of the Company or for common stock of the
acquiring company or in the event of the redemption of the Rights as set
forth above.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights, or to shorten
or lengthen any time period under the Rights Agreement. The foregoing
notwithstanding, no amendment may be made to the Rights Agreement during
the Special Period or at a time when the Rights are not redeemable, except
to cure any ambiguity or correct or supplement any provision contained in
the Rights Agreement which may be defective or inconsistent with any other
provision therein.
The Rights Agreement specifying the terms of the Rights is
attached hereto as an exhibit and is incorporated herein by reference. The
foregoing description of the Rights is qualified in its entirety by
reference to such exhibit.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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4 Rights Agreement, dated as of February 11, 1999,
between Medaphis Corporation and American Stock
Transfer & Trust Company, which includes as Exhibit B
thereto, the Form of Rights Certificates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MEDAPHIS CORPORATION
By: /s/ Randolph L.M. Hutto
__________________________
Name: Randolph L.M. Hutto
Title: Executive Vice President
Date: February 12, 1999
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
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4 Rights Agreement, dated as of February 11,
1999, between Medaphis Corporation and
American Stock Transfer & Trust Company,
which includes as Exhibit B thereto the
Form of Rights Certificates.
MEDAPHIS CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF FEBRUARY 11, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 11, 1999 (the
"Agreement"), between Medaphis Corporation, a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company, (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, on January 21, 1999 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
dividend distribution of one Right (as hereinafter defined) for each share
of common stock, par value $0.01 per share, of the Company (the "Common
Stock") outstanding at the close of business on February 16, 1999 (the
"Record Date"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section
11(i) or Section 11(p) hereof) for each share of Common Stock of the
Company issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined) each Right initially representing the right to
purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock of the Company (the "Preferred Stock") having the rights,
powers and preferences set forth in the form of Certificate of Designation,
Preferences and Rights attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean (x) 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 shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company, or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan,
(iv) any Person who becomes the Beneficial Owner of fifteen percent (15%)
or more of the shares of Common Stock then outstanding as a result of a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company other than during the
Special Period (as defined in Section 23(c) hereof) or at a time when the
rights are not redeemable, unless and until such Person, after becoming
aware that such Person has become the Beneficial Owner of fifteen percent
(15%) or more of the then outstanding shares of Common Stock, acquires
beneficial ownership of additional shares of Common Stock representing one
percent (1%) or more of the shares of Common Stock then outstanding, or (v)
any such Person who has reported or is required to report such ownership
(but less than 20%) on Schedule 13G under the Securities and Exchange Act
of 1934, as amended and in effect on the date of this Agreement (the
"Exchange Act") (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) which
Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such schedule (other than the
disposition of the Common Stock) and, within 10 Business Days of being
requested by the Company to advise it regarding the same, certifies to the
Company that such Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the Rights and who or
which, together with all Affiliates and Associates, thereafter does not
acquire additional shares of Common Stock while the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding; provided, however,
that if the Person requested to so certify fails to do so within 10
Business Days, then such Person shall become an Acquiring Person
immediately after such 10-Business-Day period, or (y) any Person who or
which has entered into any agreement or arrangement with the Company or any
Subsidiary of the Company providing for an Acquisition Transaction (as
defined in Section 1(b) hereof).
(b) "Acquisition Transaction" shall mean (x) a merger,
consolidation or similar transaction involving the Company or any of its
Subsidiaries as a result of which stockholders of the Company will no
longer own a majority of the outstanding shares of Common Stock of the
Company or a publicly traded entity which controls the Company or, if
appropriate, the entity into which the Company may be merged, consolidated
or otherwise combined (based solely on the shares of Common Stock received
or retained by such stockholders, in their capacity as stockholders of the
Company, pursuant to such transaction), (y) a purchase or other acquisition
of all or a substantial portion of the assets of the Company and its
Subsidiaries, or (z) a purchase or other acquisition of securities
representing 15% or more of the shares of Common Stock then outstanding.
(c) "Act" shall mean the Securities Act of 1933, as
amended.
(d) "Affected Transaction" shall have the meaning set forth
in Section 23(c) hereof.
(e) "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.
(f) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, owns or has the
right to acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a
Triggering Event (as hereinafter defined), or (C) securities
issuable upon exercise of Rights from and after the occurrence of
a Triggering Event which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to the
Distribution Date (as hereinafter defined) or pursuant to Section
3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) or Section 11(p) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right
to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an agreement,
arrangement or understanding, whether or not in writing, to vote
such security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is
not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (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 (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy
as described in the proviso to subparagraph (ii) of this
paragraph (d)) or disposing of any voting securities of the
Company; provided, however, that nothing in this paragraph (d)
shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired or which such person has the right
to acquire, through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days
after the date of such acquisition, and then only if such
securities continue to be owned by such Person at such expiration
of forty days.
(g) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of
Georgia are authorized or obligated by law or executive order to close.
(h) "Close of business" on any given date shall mean 5:00
P.M., Atlanta, Georgia time, on such date; provided, however, that if such
date is not a Business Day, it shall mean 5:00 P.M., Atlanta, Georgia time,
on the next succeeding Business Day.
(i) "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock
of such Person with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of
such Person.
(j) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(k) "Current Market Price" shall have the meaning set forth
in Section 11(d)(i) hereof.
(l) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(n) "Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b) hereof.
(o) "Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
(p) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(r) "Independent Advisor" shall have the meaning set forth
in Section 23(c) hereof.
(s) "Interest" shall have the meaning set forth in Section
23(c) hereof.
(t) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, limited liability partnership,
trust, syndicate or other entity and includes, without limitation, an
unincorporated group of persons who, by formal or informal agreement or
arrangement (whether or not in writing), have embarked on a common purpose
or act.
(u) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company, and, to
the extent that there are not a sufficient number of shares of Series
Junior Participating Preferred Stock authorized to permit the full exercise
of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar to the
terms of the Series A Junior Participating Preferred Stock.
(v) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(w) "Purchase Price" shall have the meaning set forth in
Section 4(a)(ii) hereof.
(x) "Qualifying Offer" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(y) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(z) "Rights" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(aa) "Rights Agent" shall have the meaning set forth in the
parties clause at the beginning of this Agreement.
(bb) "Rights Certificate" shall have the meaning set forth
in Section 3(a) hereof.
(cc) "Rights Dividend Declaration Date" shall have the
meaning set forth in the WHEREAS clause at the beginning of this Agreement.
(dd) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(ee) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(ff) "Special Period" shall have the meaning set forth in
Section 23(c) hereof.
(gg) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(hh) "Stock 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 or amended
pursuant to Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such pursuant to
clause (x) of the definition of Acquiring Person other than pursuant to a
Qualifying Offer, and (ii) the date that an Acquiring Person has become
such pursuant to clause (y) of the definition of Acquiring Person.
(ii) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which an amount of voting securities (or
other ownership interest having ordinary voting power) sufficient to elect
at least a majority of the directors (or other persons performing similar
functions) of such corporation is beneficially owned, directly or
indirectly, beneficially owned or otherwise controlled by such person.
(jj) "Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(kk) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ll) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) hereof.
(mm) "Transaction" shall have the meaning set forth in
Section 23(c) hereof.
(nn) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
(oo) "Value Enhancement Procedures" shall have the meaning
set forth in Section 23(c) 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 the Common Stock) 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. Issuance of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth Business Day after the Stock Acquisition Date (or, if the tenth
Business Day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date), or (ii) the close of
business on the tenth Business Day (or such later date as the Board of
Directors shall determine, provided, however, that no deferral of a
Distribution Date by the Board pursuant to this clause (ii) may be made at
any time during the Special Period) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would become an Acquiring Person, in either instance
other than pursuant to a Qualifying Offer, (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of paragraphs (b) and (c) of this
Section 3) by the certificates for the Common Stock registered in the names
of the holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock (including a
transfer to the Company). As soon as practicable after the Distribution
Date, the Rights Agent will send by first-class, insured, postage-prepaid
mail, to each record holder of the Common Stock as of the close of business
on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certificates, in substantially
the form of Exhibit B hereto (the "Rights Certificates"), evidencing one
Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of Rights
per share of Common Stock has been made pursuant to Section 11(i) and
Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall not be required to issue Rights
Certificates evidencing fractional Rights, but may, in lieu thereof, make
the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) The Company will make available, as promptly as
practicable following the Record Date, a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the "Summary of
Rights") to any holder Rights who may so request from time to time prior to
the Expiration Date. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date (as such term is defined in Section 7(a) hereof), the
transfer of any certificates representing shares of Common Stock in respect
of which Rights have been issued shall also constitute the transfer of the
Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date, and to the extent provided in
Section 22 hereof, in respect of shares of Common Stock issued after the
Distribution Date and prior to the Expiration Date. Certificates
representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall, as promptly as practicable following
the Record Date, bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement
between Medaphis Corporation (the "Company") and Rights Agent
thereunder, dated as of February 11, 1999 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices
of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing,
without charge, promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or beneficially owned by, any Person
who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are 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 (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of
Common Stock shall also be the registered holders of the associated Rights,
and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each
be substantially in the form set forth in 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
on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the Record
Date and on their face shall entitle the holders thereof to purchase such
number of one one-hundredths of a share of Preferred Stock as shall be set
forth therein at the price set forth therein (such exercise price per one
one-hundredth of a share, as adjusted from time to time hereunder, the
"Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(i) 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 (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors, in its
sole discretion, has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of the
provisions of Section 7(e) 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 Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights 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 Rights Certificates
had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at
the date of the execution of this 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 or offices designated as
the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and 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
Expiration Date, any Rights Certificate or Certificates (other than Rights
Certificates representing Rights that may have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-hundredths of a share of Preferred
Stock (or, following the occurrence of a Triggering Event, Common Stock,
other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged, with the
forms of assignment and certificate contained therein duly executed, at the
principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on
the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 hereof and Section 24 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment from the holder of a Rights Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Rights 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 Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
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 Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after
the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate contained therein duly
executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of one one-
hundredths of a share of Preferred Stock (or, following the occurrence of a
Triggering Event, Common Stock, other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earliest of (i) 5:00 P.M., Atlanta, Georgia time, on
February 16, 2009 (such date, the "Final Expiration Date"), (ii) the time
at which all of the Rights are redeemed or exchanged as provided in Section
23 or Section 24 hereof, respectively, or (iii) the time at which all of
the rights expire pursuant to Section 13(d) hereof (the earliest of (i),
(ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$25.00, and shall be subject to adjustment from time to time as provided in
Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) per one-hundredth of a share of
Preferred Stock (or Common Stock, other securities, cash or other assets,
as the case may be) to be purchased as set forth below and an amount equal
to any applicable transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total
number of one-hundredths of a share of Preferred Stock to be purchased, and
the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one-hundredths of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent), and the Company
will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu
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 Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) shall be made in cash or by certified bank check
or bank draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities (including Common Stock) of
the Company, pay cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the
right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an 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 the Acquiring Person has any continuing
agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board of
Directors has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section
7(e), 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. The
Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have
no liability to any holder of Rights Certificates or any 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.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of a Rights
Certificate upon the occurrence of any purported assignment or exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, if surrendered to the Company or
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 Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out
of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities, as
the case may be) that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities, as the case may be) issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange, the
Company shall use all reasonable efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use reasonable efforts to (i) file,
as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, or as soon as required by law
following the Distribution Date, as the case may be a registration
statement on an appropriate form under the Act, with respect to the Common
Stock or other securities purchasable upon exercise of the Rights, (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 Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the date of
the expiration of the Rights. 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. The Company may temporarily suspend, for a period of time
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 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. In addition, if the Company shall
determine that a registration statement is required in other circumstances
following the Distribution Date, the Company similarly may temporarily
suspend the exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-hundredths of a
share of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities, as the case may be) delivered
upon exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is
a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any
rights of a stockholder of the Company with respect to 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 and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
shares, or fractions thereof, purchasable upon exercise of 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 Stock payable in shares of Preferred Stock, (B)
subdivide or split the outstanding Preferred Stock, (C) combine
or consolidate the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section
7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, split, combination, consolidation or
reclassification, and the number and kind of shares of Preferred
Stock or other capital stock, as the case may be issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preferred Stock or capital stock, as
the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the transfer
books for the Preferred Stock (or other capital stock, as the
case may be) of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, split, combination, consolidation
or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, 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) hereof.
(ii) In the event any Person shall, at any time
after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a)
hereof, or is an acquisition of shares of Common Stock pursuant
to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors who are not
officers of the Company or any of its subsidiaries and who are
not representatives, nominees, Affiliates or Associates of an
Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to
the Company's stockholders and not inadequate (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 on
an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders (provided, however, that no such determination shall
be made during the Special Period) (a "Qualifying Offer"),
then, promptly following the occurrence of such event, proper provision
shall be made so that each holder of a Right (except as provided below and
in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event (whether or not such
Right was then issued or exercisable), and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date of such first occurrence
(such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's Amended and
Restated Certificate of Incorporation, but which are not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, is not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company acting by
resolution of the Board of Directors shall (A) determine the
value of the Adjustment Shares issuable upon the exercise of such
Right (the "Current Value"), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the
Preferred Stock, which the Board of Directors has deemed to have
essentially the same value or economic rights as shares of Common
Stock (such shares of preferred stock being referred to as
"Common Stock Equivalents")), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors
based upon the advice of a nationally recognized investment
banking firm selected by the Board; provided, however, that if
the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. For
purposes of the preceding sentence, the term "Spread" shall mean
the excess of (i) the Current Value over (ii) the Purchase Price.
If the Board of Directors determines in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period"). To the
extent that action is to be taken pursuant to the first and/or
third sentences of this Section 11(a)(iii), the Company (1) shall
provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (2) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such shareholder approval
for such authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of each Adjustment Share
shall be the Current Market Price (as defined in Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the per share or per unit value of any Common
Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of
Preferred Stock ("Equivalent Preferred Stock")) or securities convertible
into Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred Stock
or Equivalent Preferred Stock) less than the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
subscription or offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock 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 shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred Stock
and/or Equivalent Preferred Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration, part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith
by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular periodic cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) 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 Current Market Price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock, and the denominator of which shall be such
Current Market Price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. 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 be adjusted to be the
Purchase Price which would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per
share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination, consolidation, reverse stock
split or reclassification of such Common Stock, and the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination, consolidation, reverse stock split or reclassification shall
not have occurred prior to the commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, then, and
in each such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system or as quoted by
the Nasdaq National Market with respect to securities listed or admitted to
trading on another national securities exchange or quoted by the Nasdaq
National Market, respectively, or if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange or quoted
by the Nasdaq National Market, 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 Stock Market or such other quotation
system then in use, or, if on any such date the shares of Common Stock are
not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors. If on any such date
the Common Stock is not publicly held and is not so listed, admitted to
trading or quoted, and no market maker is making a market in the Common
Stock, Current Market Price shall mean the fair value of such shares on
such date as determined in good faith by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
Current Market Price per share of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence thereof). If the Current
Market Price per share of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or admitted to trading or quoted in a manner described in clause (i)
of this Section 11(d), the Current Market Price per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the Current Market Price
per share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or admitted to trading or
quoted, the Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of one one-hundredth
of a share of Preferred Stock shall be equal to the Current Market Price of
one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease in the Purchase Price of at least one
percent (1%); provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest ten-
thousandth of a share of Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the
date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock other than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the Purchase Price
thereof (or the number of Rights)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 Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions
of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one one-
hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a share of Preferred
Stock (calculated to the nearest one-millionth) obtained by (i) multiplying
(x) the number of 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 lieu of
any adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-hundredths of a share of Preferred
Stock 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 of a Right) 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 Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement. If
Rights 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 Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company,
new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights 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 share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-hundredths of a share and the number of one one-hundredth
of a share which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of one one-hundredths of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall use all reasonable efforts 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
non-assessable such number of one one-hundredths of a share of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence
of such event the issuance to the holder of any Right exercised after such
record date of the number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-hundredths
of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise 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
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such adjustments in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in its good faith judgment the
Board of Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at less than the Current Market
Price, (iii) issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale, or transfer the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, or (iii) combine or consolidate the outstanding shares of Common
Stock into a smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date (or issued or delivered on or
after the Distribution Date pursuant to Section 22 hereof), shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Preferred Stock and the Common Stock, a copy of such
certificate and (c) if a Distribution Date has occurred, mail or cause the
Rights Agent to mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other Person or
Persons (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y)
any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property
or the shares of Common Stock held by stockholders of the Company
immediately prior to the consummation of the transaction which remain
outstanding shall constitute less than 50% of the total number of shares of
Common Stock outstanding immediately following consummation of the
transaction, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole and calculated on the basis of the
Company's most recent regularly prepared financial statements) to any
Person or Persons (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section 11(o)
hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall,
thereafter, have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-assessable
and freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a
Right is exercisable immediately prior to the first occurrence of a Section
13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one one-
hundredths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and (2) dividing
that product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted, changed or exchanged
in such merger or consolidation, or, if no securities are so
issued, the Person that is the other party to such merger or
consolidation, or, if the other party to the merger does not
survive the merger, the person that does survive the merger
(including the Company, if it survives); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets,
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) if the Common Stock of such
Person is not and has not been so registered and such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such Section 13
Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement confirming that the requirements of Section 13(a)
and Section 13(b) hereof shall promptly be performed in accordance with
their terms, and further providing that, as soon as practicable after the
date of any such Section 13 Event, the Principal Party will
(i) prepare and file a registration statement
under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration
Date; and
(ii) take all such other action as may be
necessary to enable the Principal Party to issue the securities
purchasable upon exercise of the Rights, including but not
limited to the registration or qualification of such securities
under all requisite securities laws of jurisdictions of the
various states and the listing of such securities on such
exchanges and trading markets as may be necessary or appropriate;
and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraph (x) or (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons, or a wholly owned subsidiary of any
such Person or Persons, who acquired shares of Common Stock pursuant to a
Qualifying Offer (as such term is defined in Section 11(a)(ii) hereof),
(ii) the price per share of Common Stock offered in such transaction is not
less than the price per share of Common Stock paid to all holders of shares
of Common Stock whose shares were purchased pursuant to such Qualifying
Offer and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same
as the form of consideration paid pursuant to such Qualifying Offer. Upon
consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(i)
and Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of any such fractional Rights, there
shall be paid to the registered holders of the Rights 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 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 of the Rights for any
Trading 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
on the New York Stock Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system or The Nasdaq National Market
with respect to securities listed on another national securities exchange
or quoted by The Nasdaq National Market, respectively, or, if the Rights
are not listed or admitted to trading on any national securities exchange
or quoted by The Nasdaq National Market, 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 National Market or such other
quotation 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. 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 shall be
used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at
the option of the Company, be evidenced by depositary receipts) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth of a share of Preferred Stock, the Company
may pay to the registered holders of Rights 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 one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market
value of one one-hundredth of a share of Preferred Stock shall be one one-
hundredth of the closing price of a share of Preferred Stock (or, if
unavailable, the appropriate alternative price (in each case, as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights 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 (1) share of
Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price of one share of
Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of such Right
expressly waives such holder's right to receive any fractional Rights or
any fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), 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 Rights Certificate
in the manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights 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 shares of Common
Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
contained therein duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall be required to
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 reasonable best efforts to have
any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
one one-hundredths of a share of Preferred Stock or any other securities of
the Company which may at any time be issuable upon the exercise of the
Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
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 Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, reimbursement for its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in good faith in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, or any instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
reasonably believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust, stock transfer or other
shareholder services 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, but only if such corporation would be
eligible for appointment as a successor Rights Agent under the provisions
of Section 21 hereof. If at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) If at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
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 Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or
in the Rights Certificates, nor shall it be required to verify the same
(except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11, Section 13 or Section 24
hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing
any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided,
however, 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 (other than
internal costs incurred by the Rights Agent in providing services to the
Company in the ordinary course of its business as Rights Agent) 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 Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail, and, if such resignation occurs
after the Distribution Date, to the registered holders of the Rights
Certificates 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 Stock and Preferred Stock, by
registered or certified mail, and, if such removal occurs after the
Distribution Date, to the holders of the Rights 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 Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any Rights
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) a legal business
entity organized and doing business under the laws of the United States or
of any state of the United States, in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to
supervision and examination by a Federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000 or (b) an Affiliate of a legal business
entity described in clause (a) of this sentence. 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 shall execute and deliver any further assurance,
conveyance, act or deed necessary for that purpose. Not later than the
effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and the Preferred Stock, and, if such appointment
occurs after the Distribution Date, mail a notice thereof in writing to the
registered holders of the Rights 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 Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of 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 Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of
securities hereafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors issue Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors may, at its option, at any time
prior to the earlier of (i) the close of business on the tenth Business Day
following the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close of business on the
tenth Business Day following the Record Date), or (ii) the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until such time as
the Company's right of redemption hereunder has expired. The Company may,
at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the Current Market Price, as defined in Section 11(d)(i) hereof,
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Notwithstanding the provisions of Section 23(a) hereof,
if, within 180 days of a public announcement by a third party of an intent
or proposal to engage (without the current and continuing concurrence of
the Board) in a transaction involving an acquisition of or business
combination with the Company or otherwise to become an Acquiring Person,
there is an election of Directors (whether at one or more stockholder
meetings and/or pursuant to written stockholder consent) resulting in a
majority of the Board of Directors being comprised of persons who were not
nominated by the Board of Directors in office immediately prior to such
election, then following the effectiveness of such election for a period of
180 days (the "Special Period") the Rights, if otherwise then redeemable
absent the provisions of this paragraph (c), shall be redeemable upon
either of the following conditions being satisfied, but not otherwise:
(A) by a vote of a majority of the Directors then in office,
provided that
(I) before such vote, the Board of Directors shall have
implemented the Value Enhancement Procedures (as defined below)
and
(II) promptly after such vote, the Company publicly announces
such vote and
(a) the manner in which the Value Enhancement Procedures
were implemented,
(b) any material financial, business, personal or other
benefit or relationship (an "Interest") which each Director
and each Affiliate of such Director (identifying each
Director and Affiliate separately in relation to each such
Interest) has in connection with any suggested, proposed or
pending transaction with or involving the Company (a
"Transaction"), or with any other party or Affiliate of any
other party to a Transaction, where such Transaction would
or might, or is intended to, be permitted or facilitated by
redemption of the Rights (an "Affected Transaction"), other
than treatment as a shareholder on a pro rata basis with
other shareholders or pursuant to compensation arrangements
as a director or employee of the Company or a subsidiary
which have been previously disclosed by the Company,
(c) the individual vote of each Director on the motion to
redeem the Rights, and
(d) the statement of any Director who voted for or against
the motion to redeem the Rights and desires to have a
statement included in such announcement, or
(B) if clause (A) is not applicable, by a vote of a majority of
the Directors then in office, provided that (I) if there is a
challenge to the Directors' action approving redemption and/or
any related Affected Transaction as a breach of the fiduciary
duty of care or loyalty, the Directors, solely for purposes of
determining the effectiveness of such redemption pursuant to this
clause (B), are able to establish the entire fairness of such
redemption and, if applicable, such related Affected Transaction,
and (II) the Company shall have publicly announced the vote of
the Board of Directors approving such redemption and, if
applicable, such related Affected Transaction, which announcement
shall set forth the information prescribed by clauses (A) (II)
(b), (c) and (d) above.
"Value Enhancement Procedures" shall mean:
(1) the selection by the Board of Directors of an independent
financial advisor (the "Independent Advisor") from among financial
advisors which have national standing, have established expertise in
advising on mergers, acquisitions and related matters and have no
Interest relating to an Affected Transaction, and have not during the
preceding year provided services to, been engaged by or been a
financing source for any other party to an Affected Transaction or any
Affiliate of any such party or of any Director (other than the Company
and its subsidiaries);
(2) whether or not there is a then-pending Affected Transaction, the
receipt by the Board of Directors from its Independent Advisor of (a)
such advisor's view (expressed in such form and subject to such
qualifications and limitations as the Independent Advisor deems
appropriate) regarding whether redemption of the Rights will serve the
best interests of the Company and its shareholders or (b) such
advisor's statement that it is unable to express such a view, setting
forth the reasons therefor;
(3) if there is a then-pending Affected Transaction,
(A) the establishment and implementation by the Board of
Directors of a process and procedures approved by its Independent
Advisor which the Board of Directors and such advisor conclude
would be most likely to result in the best value reasonably
available to shareholders (regardless of whether such Affected
Transaction involves a "sale of control" or "break-up" of the
Company for Delaware law purposes),
(B) the Board of Directors (I) receiving the opinion of its
Independent Advisor, in customary form and content for
transactions of the type involved, that the Affected Transaction
is fair to the Company's shareholders from a financial point of
view and (II) determining, and the Independent Advisor
confirming, that it has no reason to believe that a superior
transaction is reasonably available for the benefit of the
Company's shareholders, and
(C) the execution of a definitive transaction agreement and other
definitive documentation necessary to effect the Affected
Transaction.
(d) 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
and other than in connection with the purchase or repurchase by any of
them of Common Stock prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time
after the first occurrence of a Section 11(a)(ii) Event, 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
7(e) hereof) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or any entity holding Common Stock 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 Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of the Common Stock 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 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Stock (or Equivalent
Preferred Stock, as such term is defined in paragraph (b) of Section 11
hereof) for Common Stock exchangeable for Rights, at the initial rate of
one one-hundredth of a share of Preferred Stock (or Equivalent Preferred
Stock) for each share of Common Stock, as appropriately adjusted to reflect
stock splits, stock dividends and other similar transactions after the date
hereof.
(d) In the event that the number of shares of Common Stock
which are authorized by the Company's Amended and Restated Certificate of
Incorporation but which are not outstanding or reserved for issuance for
purposes other then upon exercise of the Rights is not sufficient to permit
any exchange of Rights as contemplated in accordance with this Section 24,
the Board of Directors shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the
purposes of this subsection (e), the current market value of a whole share
of Common Stock shall be the closing price of a share of Common Stock (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.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular periodic cash
dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for
or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, or (iii) to effect
any reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision or split of outstanding shares of Preferred
Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions,
of, 50% or more the of the assets, or earning power of the Company and/or
its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and 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, 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 shares of Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references
in the preceding paragraph to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, other securities.
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
Rights 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 by the Rights Agent with the Company) as
follows:
Medaphis Corporation
2700 Cumberland Parkway, Suite 300
Atlanta, Georgia 30339
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights 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 by the Rights Agent with the Company) as
follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) 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.
(a) Prior to the Distribution Date, and subject to the
provisions of Section 27(b) hereof, the Company and the Rights Agent shall,
if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution Date, and subject
to the provisions of Section 27(b) hereof, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to
change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
(b) Notwithstanding anything herein to the contrary, no
supplement or amendment shall be made to this Agreement during the Special
Period or at a time when the Rights are not redeemable, except as
contemplated by clause (i) or (ii) of Section 27(a) hereof.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may
be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including
a determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board of Directors, or any of the directors on the
Board of 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 Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
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 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 close of business on the tenth Business Day following the
date of such determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring a specific group of Directors of the
Company to act is held to by any court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination shall
then be made by the Board of Directors of the Company in accordance with
applicable law and the Company's Amended and Restated Certificate of
Incorporation and By-laws.
Section 32. Governing Law. This Agreement, each Right and each
Rights 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 made and to be performed entirely within such
State.
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 for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above written.
Attest: MEDAPHIS CORPORATION
By /s/ Peggy Sherman By /s/ Randolph L.M. Hutto
-------------------- -----------------------------
Name: Peggy Sherman Name: Randolph L.M. Hutto
Title: Asst. Secretary Title: Executive Vice President
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By /s/ Susan Silber By /s/ Herbert J. Lemmer
-------------------- -------------------------------
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
MEDAPHIS CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of MEDAPHIS CORPORATION, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Amended and Restated Certificate of Incorporation of the
said Corporation, the said Board of Directors on January 21, 1999, adopted
the following resolution creating a series of 1,000,000 shares of Preferred
Stock designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and it hereby is created, and that the designation and
amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" and
the number of shares constituting such series shall be 1,000,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $5.00 or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$0.01 per share, of the Corporation (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 Junior Participating Preferred
Stock. In the event the Corporation shall at any time after January 21,
1999 (the "Rights Declaration Date") (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of
shares of Series Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in Paragraph
(A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $5.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, 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 Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
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 Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to one vote on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation shall
at any time after the Rights Dividend Declaration Date (i) declare or pay
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of Series A Junior
Participating 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 or by law, the holders
of shares of Series A Junior Participating Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A
Junior Participating Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A
Junior Participating Preferred Stock) with dividends in arrears
in an amount equal to six (6) quarterly dividends thereon, voting
as a class, irrespective of series, shall have the right to elect
two (2) directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may
be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting
of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of
directors shall be exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the
holders of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they
shall have the right, voting as a class, to elect directors to
fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) directors or, if such right is exercised
at an annual meeting, to elect two (2) directors. If the number
which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of directors
as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Stock shall
have exercised their right to elect directors in any default
period and during the continuance of such period, the number of
directors shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari
passu with the Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Preferred
Stock, which meeting shall thereupon be called by the President,
a Vice-President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this Paragraph
(C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address
as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and
not later than 60 days after such order or request or in default
of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
Paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) directors voting as a
class, after the exercise of which right (x) the directors so
elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
Paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining directors theretofore elected by the
holders of the class of stock which elected the director whose
office shall have become vacant. References in this Paragraph
(C) to directors elected by the holders of a particular class of
stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect directors shall cease, (y) the term of any
directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of directors shall be such
number as may be provided for in the certificate of incorporation
or by-laws irrespective of any increase made pursuant to the
provisions of Paragraph (C)(ii) of this Section 3 (such number
being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining directors.
(D) Except as set forth herein,or as otherwise provided by law,
holders of Series A Junior Participating 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) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating 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 Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on 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 Junior Participating Preferred Stock;
(ii) declare or pay dividends on 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 Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Participating Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity 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 Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity with
the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under Paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become 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 in this Amended and
Restated Certificate of Incorporation or in any Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount equal to $100
per share of Series A Participating Preferred Stock, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained
by dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (C) below to reflect
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and
Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare or pay any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment 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.
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 the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in 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 after the Rights Dividend Declaration Date
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change
of shares of Series A Junior Participating 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.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. This Amended and Restated Certificate of
Incorporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
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 Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of
perjury this 11th day of February, 1999.
_______________________________
Attest:
_______________________________
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 16, 2009, SUBJECT TO EARLIER REDEMPTION OR
EXPIRATION PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT 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
ANY SUCH 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 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 SECTION 7(e) OF SUCH
AGREEMENT.](1)
------------------
(1)
The portion of the legend in brac
applicable and shall replace the preceding sentence.
Rights Certificate
MEDAPHIS 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, 1999 (the
"Rights Agreement"), between Medaphis Corporation a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 P.M.
(Atlanta, Georgia time) on February 16, 2009 at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-hundredth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $25 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate
duly completed and executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of February 11, 1999, based on the Preferred
Stock as constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
As more fully set forth in the Rights Agreement, from and after
the first occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of such Acquiring Person,
(or of any such Affiliate or Associate who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such, such Rights shall
become null and void without any further action and no holder hereof shall
have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities, which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-
hundredths of a share of Preferred Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $.001 per Right at any time prior to the earlier
of the close of business on (i) the tenth Business Day following the Stock
Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. For 180 days
following a change in control of the Board of Directors of the Company,
that has not been approved by the Board of Directors, occurring within six
months of an unsolicited third party acquisition or business combination
proposal, the new directors are entitled to redeem the rights (assuming the
rights would have otherwise been redeemable), including to facilitate an
acquisition or business combination transaction involving the Company, but
only (1) if they have followed certain prescribed procedures or (2) if such
procedures are not followed, and if their decision regarding redemption
and/or any acquisition or business combination is challenged as a breach of
fiduciary duty of care or loyalty, the directors (solely for purposes of
determining the effectiveness of such redemption) are able to establish the
entire fairness of such redemption, and, if applicable, such transaction.
In addition, under certain circumstances following the Stock Acquisition
Date, the Rights may be exchanged, in whole or in part, for shares of the
Common Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such shares. Immediately
upon the action of the Board of Directors of the Company authorizing any
such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon
such exchange.
If the Company so determines, fractional shares of Preferred
Stock 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 share of Preferred Stock, 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. The Company, at
its election, may require that a number of Rights be exercised so that only
whole shares of Preferred Stock would be issued.
No holder of this Rights Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of
shares of Preferred Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give consent to or
withhold consent from any corporate action, or, to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _________ __, ____
ATTEST: MEDAPHIS CORPORATION
_______________________ By _________________________________
Secretary Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By ____________________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto __________________________________
___________________________________________________________________________
(Please print name and address of transferee)
___________________________________________________________________________
this Rights Certificate, together with all right, title and interest
herein, and does hereby irrevocably constitute and appoint
______________
Attorney, to transfer the within Rights Certificate on
the books of the within-named Company, with full power of substitution.
Dated: __________________, _____
_____________________________
Signature
Signature Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _______________, _____ ______________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: MEDAPHIS CORPORATION:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which may be issuable or
such other assets which may be deliverable upon the exercise of the Rights)
and requests that certificates for any such shares or securities be issued
in the name of and delivered to:
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 Rights Certificate, a new Rights Certificate for the balance 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 Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________, _____ _______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
The Board of Directors of Medaphis Corporation (the "Company")
has declared a dividend distribution of one Right for each outstanding
share of Company Common Stock to stockholders of record at the close of
business on February 16, 1999 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
without par value (the "Series A Preferred Stock"), at a Purchase Price of
$25 per Unit, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement"), dated
as of February 11, 1999, between the Company and American Stock Transfer &
Trust Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock other
than as a result of repurchases of stock by the Company or certain
inadvertent actions by institutional or certain other stockholders or the
date a Person has entered into an agreement or arrangement with the Company
or any Subsidiary of the Company providing for an Acquisition Transaction
(the "Stock Acquisition Date") or (ii) 10 business days (or such later date
as the Board shall determine, provided, however, that no deferral of a
Distribution Date by the Board pursuant to the terms of the Rights
Agreement described in this clause (ii) may be made at any time during the
Special Period (as defined below)) following the commencement of a tender
offer or exchange offer that would result in a person or group becoming an
Acquiring Person. An Acquisition Transaction is defined in the Rights
Agreement as (x) a merger, consolidation or similar transaction involving
the Company or any of its Subsidiaries as a result of which stockholders of
the Company will no longer own a majority of the outstanding shares of
Common Stock of the Company or a publicly traded entity which controls the
Company or, if appropriate, the entity into which the Company may be
merged, consolidated or otherwise combined (based solely on the shares of
Common Stock received or retained by such stockholder, in its capacity as a
stockholder of the Company, pursuant to such transaction), (y) a purchase
or other acquisition of all or a substantial portion of the assets of the
Company and its Subsidiaries, or (z) a purchase or other acquisition of
securities representing 15% or more of the shares of Common Stock then
outstanding. Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with
such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute the transfer
of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering Event (as defined
below) that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and
will expire at 5:00 P.M. (Atlanta, Georgia time) on February 16, 2009,
unless earlier redeemed, exchanged, extended or terminated by the Company
as described below. At no time will the rights have any voting power.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair and not inadequate to and to
otherwise be in the best interests of the Company and its stockholders,
after receiving advice from one or more investment banking firms (a
"Qualifying Offer"), each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are
no longer redeemable by the Company as set forth below.
For example, at an exercise price of $25 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $50 worth of Common Stock (or other consideration, as noted above)
for $25. Assuming that the Common Stock had a per share value of $5 at
such time, the holder of each valid Right would be entitled to purchase 10
shares of Common Stock for $25.
In the event that (i) the Company is acquired in a merger (other
than a "clean-up" merger which follows a Qualifying Offer) or other
business combination transaction (x) in which the Company is not the
surviving entity, (y) in which the Company is the surviving entity and the
Common Stock is changed or exchanged or the Common Stock remains
outstanding but constitutes less than 50% of the shares outstanding
immediately following the merger, or (ii) 50% or more of the Company's
assets or earning power is transferred, each holder of a Right (except
Rights which have previously been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of
the Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
At any time after a person becomes an Acquiring Person and prior
to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding Common Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole
or in part, at an exchange ratio of one share of Common Stock, or one one-
hundredth of a share of Preferred Stock (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
At any time until ten business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors).
For 180 days (the "Special Period") following a change in control
of the Board of Directors of the Company, that has not been approved by the
Board of Directors, occurring within six months of an unsolicited third
party acquisition or business combination proposal, the new directors are
entitled to redeem the rights (assuming the rights would have otherwise
been redeemable), including to facilitate an acquisition or business
combination transaction involving the Company, but only (1) if they have
followed certain prescribed procedures or (2) if such procedures are not
followed, and if their decision regarding redemption and/or any acquisition
or business combination is challenged as a breach of fiduciary duty of care
or loyalty, the directors (solely for purposes of determining the
effectiveness of such redemption) are able to establish the entire fairness
of such redemption, and, if applicable, such transaction.
Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the $.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common
Stock (or other consideration) of the Company or for common stock of the
acquiring company or in the event of the redemption of the Rights as set
forth above.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights, or to shorten
or lengthen any time period under the Rights Agreement. The foregoing
notwithstanding, no amendment may be made to the Rights Agreement during
the Special Period or at a time when the Rights are not redeemable, except
to cure any ambiguity or correct or supplement any provision contained in
the Rights Agreement which may be defective or inconsistent with any other
provision therein.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A/Current Report on Form 8-K. A copy of the Rights Agreement is
available free of charge from the Rights Agent. This summary description
of the Rights does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
