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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): July 24, 1996
PHAMIS, INC.
(Exact name of registrant as specified in its charter)
Washington 0-25078 91-1141795
(State of other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
1001 Fourth Avenue Plaza, Suite 1500, Seattle, Washington 98154-1144
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 622-9558
Item 5. Other Events.
On July 24, 1996, the Board of Directors of PHAMIS, Inc. (the "Company")
declared a dividend distribution of one Right for each outstanding share of the
common stock, par value $0.0025 per share, of the Company (the "Common Stock"),
to shareholders of record at the close of business on July 31, 1996. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $0.0025
per share (the "Preferred Stock"), at a purchase price of $105 per one one-
thousandth of a share of Preferred Stock, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and First Interstate Bank of Washington,
N.A., 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. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) the expiration of the
Company's redemption rights following a public announcement that a person or
group of affiliated or associated persons, with certain exceptions (an
"Acquiring Person"), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) 10 business days (or such later date as the
Continuing Directors (as defined in the Rights Agreement) shall determine)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of such outstanding shares
of Common Stock.
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 July 31, 1996,
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
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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 (unless sooner
redeemed or exchanged) and will expire at the close of business on July 31, 2006
(the "Final Expiration Date"), unless earlier redeemed or exchanged by the
Company.
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, any Acquiring Person becomes the beneficial owner of 15%
or more of Common Stock (other than pursuant to an offer for all outstanding
shares of Common Stock which the Continuing Directors (as defined in the Rights
Agreement) determine to be fair to and otherwise in the best interests of the
Company and its shareholders) 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 any of the events 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.
For example, at an exercise price of $105 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 $210 worth
of Common Stock (or other consideration, as noted above) for $105. Assuming
that the Common Stock had a per share value of $21 at such time, the holder of
each valid Right would be entitled to purchase ten shares of Common Stock for
$105.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or the Common Stock is
changed or exchanged (other than in a merger which follows and is on the same
terms as an offer described in the second preceding paragraph), or (ii) 50% or
more of the Company's assets, earning power or cash flow is sold or transferred,
each holder of a Right (except Rights which previously have 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."
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time until the close of business on the tenth business day following
the Stock Acquisition Date, the Company may redeem the Rights in whole, but not
in part, at a price of $0.01 per Right. After the redemption period has
expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership less than 15% of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company. Immediately upon the action of the Board of Directors ordering
redemption
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of the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price.
After there is an Acquiring Person the Board of Directors may elect to
exchange each Right (other than Rights that have become null and void as
described above) for one share of Common Stock (or other equivalent securities)
per Right pursuant to the terms of the Rights Agreement.
Other than those provisions relating to the principal economic terms of the
Rights, 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 of Directors of the Company in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.
The Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment equal to the greater of $1 per share and
1,000 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a
liquidation payment equal to $10 per share in preference to the Common Stock.
Each share of Preferred Stock will have 1,000 votes per share, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock is exchanged, Preferred Stock will be entitled
to receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by the Board, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time a person or
group other than an exempt person has acquired beneficial ownership of 15% or
more of the Common Stock, because until such time the Rights may generally be
redeemed by the Company at $0.01 per Right.
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 as set forth above.
The Rights Agreement between Phamis, Inc. and First Interstate Bank of
Washington, N.A. as Rights Agent, which includes as Exhibit B thereto the form
of Rights Certificate, is attached hereto as Exhibit 4.1 and is incorporated
herein by reference. The foregoing description of the Rights does not purport
to be complete and is qualified in its entirety by reference to such Exhibit.
Item 7. Financial Statements and Exhibits
Exhibits
3.1 Amended and Restated Articles of Incorporation of the
Company, amended and restated as of October 26, 1994
3.2 Amendment to Articles of Incorporation, dated as of
July 24, 1996
4.1 Rights Agreement dated as of July 24, 1996 by and
between Phamis, Inc. and First Interstate Bank of
Washington, N.A., as Rights Agent (incorporated by
reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A dated August 1, 1996)
99.1 Press Release, dated July 29, 1996
99.2 Form of letter to shareholders to be mailed with
copies of the summary of rights, dated July 31, 1996.
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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.
PHAMIS, INC.
Date: August 1, 1996 By: /s/ Gregg W. Blodgett
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Gregg W. Blodgett
Vice President of Administration and
Finance, Treasurer and Controller
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EXHIBIT INDEX
to
CURRENT REPORT ON FORM 8-K
3.1 Amended and Restated Articles of Incorporation of the Company, amended
and restated as of October 26, 1994
3.2 Amendment to Articles of Incorporation, dated as of July 24, 1996
4.1 Rights Agreement dated as of July 24, 1996 by and between Phamis,
Inc. and First Interstate Bank of Washington, N.A., as Rights Agent
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A dated August 1, 1996)
99.1 Press Release, dated July 29, 1996
99.2 Form of letter to shareholders to be mailed with copies of the summary
of rights.
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EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PHAMIS, INC.
Pursuant to the provisions of RCW 23B.10.070 of the Washington Business
Corporation Act, Phamis, Inc., a Washington corporation, hereby restates its
Articles of Incorporation as now and heretofore amended:
ARTICLE 1. NAME
The name of this corporation is Phamis, Inc.
ARTICLE 2. PURPOSES AND POWERS
The purpose of this corporation is to engage in any business, trade or
activity which may lawfully be conducted by a corporation organized under the
Washington Business Corporation Act.
This corporation shall have the authority to engage in any and all such
activities as are incidental or conductive to the attainment of the powers of
this corporation and to exercise any and all powers authorized or permitted
under any laws that may be now or hereafter applicable or available to this
corporation.
ARTICLE 3. REGISTERED OFFICE AND AGENT
The address of the registered office of this corporation is 1111 Third
Avenue, Suite 3400, Seattle, Washington 98101 and the name of its registered
agent is Joseph P. Whitford.
ARTICLE 4. SHARES
The aggregate number of shares which the corporation has authority to issue
is 29,000,000 shares, the par value of each of which shares is $0.0025
consisting of 25,000,000 shares of common stock and 4,000,000 shares of
preferred stock. Within the limitations established by law, the Board of
Directors is authorized to fix or alter the dividend rights, dividend rates,
rights and terms of redemption (including sinking fund provisions), redemption
price or prices, liquidation preference, conversion rights, voting rights and
other rights of any wholly unissued shares of preferred stock, and fix and amend
the number of shares constituting any issued or unissued series and the
designation thereof, or any of the foregoing. Dividends may be paid to the
holders of common stock in theretofore unissued shares of authorized common
stock or any authorized series of preferred stock.
ARTICLE 5. PREEMPTIVE RIGHTS
No preemptive rights shall exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE 6. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors shall not exist
with respect to shares of stock of this corporation.
ARTICLE 7. DURATION
The period of this corporation's duration shall be perpetual.
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ARTICLE 8. DIRECTORS
The directors shall be divided into three classes, designated Class I,
Class II and Class III. Initially, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and Class III directors
for a three-year term. At any annual meeting of shareholders held during or
after 1995, successors to the class of directors whose term expires at that
annual meeting shall be elected to serve until the third ensuing annual meeting
of shareholders. If the number of directors is changed in the manner provided
by the Bylaws, any increase or decrease shall be apportioned among the classes
so the number of directors in each class is as nearly equal as possible, and any
additional director of any class elected or appointed to fill a vacancy
resulting from an increase in such class shall hold office until the next
shareholders' meeting at which directors are elected. A director shall hold
office until the annual meeting for the year in which such director's term
expires and until such director's successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. A director may be removed only for cause; such removal
shall be by the holders of not less than two-thirds of the holders of the shares
entitled to elect the director or directors whose removal is sought in the
manner provided by the Bylaws.
ARTICLE 9. BYLAWS
The Board of Directors shall have the power to adopt, amend or repeal
the Bylaws of this corporation, at a duly called meeting or by written consent.
The shareholders shall also have the power to adopt, amend or repeal the Bylaws
of this corporation upon the affirmative vote of the holders of two-thirds of
the outstanding shares entitled to vote thereon.
ARTICLE 10. AMENDMENTS TO ARTICLES OF INCORPORATION
This corporation reserves the right to amend or repeal, by the
affirmative vote of the holders of two-thirds of the shares entitled to vote
thereon, the provisions of these articles of incorporation relating to the
following matters, and the rights of the shareholders of this corporation are
granted subject to this reservation: Article 6 -Cumulative Voting; Article 8 -
Directors; Article 9 - Bylaws; Article 10 - Amendments to Articles of
Incorporation; Article 12 - Special Shareholders' Meetings; and Article 13 -
Special Voting Requirements.
ARTICLE 11. LIMITATIONS ON LIABILITY
A director of this corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director,
except for liability of the director (i) for acts or omissions that involve
intentional misconduct by the director or a knowing violation of law by the
director, (ii) for conduct violating RCW 23B.08.310 of the Washington Business
Corporation Act, or (iii) for any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. If the Washington Business Corporation Act is
amended in the future to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of this corporation shall be eliminated or limited to the full extent permitted
by the Washington Business Corporation Act, as so amended, without any
requirement of further action by the shareholders.
ARTICLE 12. SPECIAL SHAREHOLDERS' MEETINGS
Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Washington Business Corporation Act, may not
be called by shareholders and may only be called by the Chairman of the Board,
the President, or by the Board of Directors.
ARTICLE 13. SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, by these Restated
Articles of Incorporation or otherwise, any "Business Combination" (as
hereinafter defined) involving this corporation shall be subject to approval in
the manner set forth in this Article 13.
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Section 13.1. Definitions. For the purposes of this Article:
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13.1.1 "Business Combination" means (i) a merger, share exchange
or consolidation of this corporation or any of its Subsidiaries with any other
corporation; (ii) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition or encumbrance, whether in one transaction or a series of
transactions, by this corporation or any of its Subsidiaries of all or a
substantial part of this corporation's assets otherwise than in the usual and
regular course of business; or (iii) any agreement, contract or other
arrangement providing for any of the foregoing transactions.
13.1.2 "Continuing Director" means any member of the Board of
Directors who was a member of the Board of Directors on December 1, 1994 or who
is elected to the Board of Directors after December 1, 1994 upon the
recommendation of a majority of the Continuing Directors voting separately and
as a subclass of Directors on such recommendation.
13.1.3 "Subsidiary" means a domestic or foreign corporation, a
majority of the outstanding voting shares of which are owned, directly or
indirectly, by this corporation.
Section 13.2. Vote Required for Business Combinations.
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13.2.1. Supermajority Vote. Except as provided in subsections
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13.2.2 and 13.2.3 hereof, the affirmative vote of the holders of not less than
two-thirds of the outstanding shares entitled to vote thereon and, to the
extent, if any, provided by resolution adopted by the Board of Directors
authorizing the issuance of a class or series of Common Stock or Preferred
Stock, the affirmative vote of the holders of not less than two-thirds of the
outstanding shares of such class or series, voting as a separate voting group,
shall be required for the adoption or authorization of a Business Combination.
13.2.2. Majority Vote. Notwithstanding subsection 13.2.1
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hereof, if a Business Combination shall have been approved by a majority of the
Continuing Directors, voting separately and as a subclass of Directors, and if
such Business Combination is otherwise required to be approved by this
corporation's shareholders pursuant to the provisions of the Washington Business
Corporation Act or of these Restated Articles of Incorporation other than this
Article 13, then the affirmative vote of the holders of not less than a majority
of the outstanding shares entitled to vote thereon and, to the extent, if any,
provided by resolution adopted by the Board of Directors authorizing the
issuance of a class or series of Common Stock or Preferred Stock, the
affirmative vote of the holders of not less than a majority of the outstanding
shares of such class or series, voting as a separate voting group, shall be
required for the adoption or authorization of such Business Combination.
13.2.3. No Shareholder Vote. Notwithstanding subsection 13.2.1
-------------------
or 13.2.2 hereof, if a Business Combination shall have been approved by a
majority of the Continuing Directors, voting separately and as a subclass of
Directors, and if such Business Combination is not otherwise required to be
approved by this corporation's shareholders pursuant to the provisions of the
Washington Business Corporation Act or of these Restated Articles of
Incorporation other than this Article 13, then no vote of the shareholders of
this corporation shall be required for approval of such Business Combination.
EXECUTED this 26th day of October, 1994.
PHAMIS, INC.
By: /s/ Frank Sample
---------------------------------
Frank Sample, President
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EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PHAMIS, INC.
Pursuant to the provisions of RCW 23B.06.020 and RCW 23B.10 of the
Washington Business Corporation Act, PHAMIS, Inc., a Washington corporation,
hereby adopts the following articles of amendment to its articles of
incorporation:
FIRST: The name of the corporation is:
PHAMIS, INC.
SECOND: Article 4 of the Restated Articles of Incorporation, as filed with
the Washington Secretary of State on October 26, 1994, is hereby amended to add
the language attached hereto as Exhibit A as a Statement of Designation,
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Preferences and Rights of Series A Junior Participating Preferred Stock.
THIRD: The amendment does not provide for an exchange, reclassification or
cancellation of any issued shares.
FOURTH: The foregoing amendment of the articles of incorporation was
adopted on July 24, 1996 by the Board of Directors of the corporation in
accordance with the provisions of RCW 23B.06.020 and RCW 23B.10.020 and
shareholder action was not required.
EXECUTED this 24th day of July, 1996.
PHAMIS, INC.
By: /s/ Frank T. Sample
-------------------------------------
Frank T. Sample, President
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Exhibit A
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STATEMENT OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PHAMIS, INC.
Pursuant to Section 23B.06.020
of the General Corporation Law
of the State of Washington
PHAMIS, INC., a corporation organized and existing under the General
Corporation Law of the State of Washington, in accordance with the provisions of
Section 23B.01.200 thereof, hereby states that pursuant to the authority
conferred upon the Board of Directors by the Restated Articles of Incorporation
of the said Corporation, the said Board of Directors on July 24, 1996, adopted
the following resolution creating a series of 8,000 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 Articles
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 8,000.
Section 2. Dividends and Distributions.
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(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock or other class of capital stock of the
Corporation 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 last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or
(b) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 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 $.0025 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 July 31, 1996 (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 A 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) above
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
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or distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1 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.
(D) The holders of shares of Series A Junior Participating Preferred Stock
shall not be entitled to receive any dividends or other distributions except as
provided herein.
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 1,000 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
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 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) If at the time of any annual meeting of shareholders for the election
of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Junior Participating
Preferred Stock are in default, the number of directors constituting the
Corporation's Board of Directors shall be increased by two. In addition to
voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A Junior
Participating Preferred Stock, voting separately as a class to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of shareholders
(and at each subsequent annual meeting of shareholders), unless all dividends in
arrears have been paid or declared and set apart for payment prior thereto, to
vote for the election of two directors of the Corporation, the holders of Series
A Junior Participating Preferred Stock being entitled to cast a number of votes
per share of Series A Junior Participating Preferred Stock as set forth in
Section 3(A). Until the default in payment of all dividends that permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of shares of Series A Junior Participating Preferred Stock at the time entitled
to cast a majority of the votes entitled to be cast for the election of any such
director at a special meeting of such holders called for that purpose, and any
vacancy thereby created shall be filled by the vote of such holders. If and
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when such default shall cease to exist, the holders of Series A Junior
Participating Preferred Stock shall be divested of the foregoing special voting
rights, subject to revesting in the event of each and every subsequent like
default in payment of dividends. Upon the termination of the foregoing special
voting rights, the terms of office of all persons who may have been elected
directors pursuant to said special voting rights shall forthwith terminate, and
the number directors constituting the Corporation's Board of Directors shall be
reduced by two. The voting rights granted by this Section 3(C) shall be in
addition to any other voting rights granted to the holders of the Series A
Junior Participating Preferred Stock in this Section 3.
(D) Except as set forth herein, 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, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration 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;
(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 cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
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<PAGE>
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 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 $10 per share, 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) 1,000 (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
Declaration Date (i) declare any dividend on Common Stock sayable 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 1,000 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 both this Section 7 and Section 2 appear to apply to a
transaction, this Section 7 will control. In the event the Corporation shall at
any time after 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 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; No Sinking Fund.
------------------------------
(A) The shares of Series A Junior Participating Preferred Stock shall not
be subject to redemption by the Corporation or at the option of any holder of
Series A Junior Participating Preferred Stock; provided, however, that the
Corporation may purchase or otherwise acquire outstanding shares of Series A
Junior Participating Preferred Stock in the open market or by offer to any
holder or holders of shares of Series A Junior Participating Preferred Stock.
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<PAGE>
(B) The shares of Series A Junior Participating Preferred Stock shall not
be subject to or entitled to the operation of a retirement or sinking fund.
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. The Restated Certificate of Incorporation of the
---------
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more 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 holders 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, this statement has been signed by the President of
PHAMIS, Inc. on this 24th day of July, 1996.
PHAMIS, INC.
By: /s/ Frank T. Sample
------------------------------------
Name: Frank T. Sample
Title: President
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<PAGE>
EXHIBIT 99.1
[PHAMIS LETTERHEAD]
Contact:
Gregg Blodgett
Chief Financial Officer
(206) 689-1401
Violet Rehberg
Investor Relations
(206) 689-1477
FOR IMMEDIATE RELEASE
- ---------------------
PHAMIS INC. ADOPTS SHAREHOLDER RIGHTS PLAN
Seattle, WA, July 29, 1996 -- PHAMIS Inc. (NASDAQ:PHAM). The Board of
Directors of PHAMIS Inc. adopted a shareholder rights plan by declaring a
dividend distribution of one Preferred Share Purchase Right on each outstanding
share of PHAMIS Inc. common stock. Each Right will entitle shareholders to buy
one one-thousandth of a share of a new series of preferred stock at an exercise
price of $105.
The Rights are designed to assure that all of PHAMIS Inc.'s shareholders
receive fair and equal treatment in the event of any proposed takeover of the
Company and to guard against partial tender offers and other abusive tactics to
gain control of PHAMIS Inc. without paying all shareholders a control premium.
The Rights are not being distributed in response to any specific effort to
acquire control of the Company.
The Rights will be exercisable only if a person or group acquires 15% or
more of PHAMIS Inc.'s common stock or announces a tender offer the consummation
of which would result in a person or group owning such number of shares.
Existing holders currently exceeding such ownership limit will not trigger the
exercise of the Rights.
If PHAMIS Inc. is acquired in a merger or other business combination
transaction or sells 50% or more of its assets or earning power, each Right will
entitle its holder (other than a person or group beneficially owning 15% or more
of PHAMIS Inc.'s common stock) to purchase, at the Right's then-current exercise
price, a number of the acquiring company's common shares having a market value
at that time of twice the Right's exercise price. In addition, if a person or
group acquires 15% or more of PHAMIS Inc.'s outstanding common stock, each Right
will entitle its holder (other than such person or members of such group) to
purchase, at the Right's then-current exercise price, a number of PHAMIS Inc.'s
common shares having a market value of twice the Right's exercise price.
Until ten days after the acquisition by a person or group of beneficial
ownership of 15% or more of the Company's common stock, the Rights are
redeemable for $.01 per Right at the option of the Board of Directors.
1
<PAGE>
The Rights are intended to enable all PHAMIS Inc.'s shareholders to realize
the long-term value of their investment in the Company. They will not prevent a
takeover, but should encourage anyone seeking to acquire the Company to
negotiate with the Board prior to attempting a takeover.
The dividend distribution of the Rights will be made on July 31, 1996,
payable to shareholders of record on that date. The Rights will expire ten years
later on July 31, 2006. The Rights distribution is not taxable to shareholders.
PHAMIS Inc. healthcare information solutions are part of a complete
hardware and software system strategy designed for integrated healthcare
delivery enterprises. Products include PHAMIS-LASTWORD/(R)/, an enterprise-wide,
patient-centered healthcare information system; DataBreeze/TM/, a physician
network management information system; and PHAMIS-enterprise view/TM/, a high-
level decision support and clinical research tool. PHAMIS Inc.'s Web Site:
http://www.phamis.com.
2
<PAGE>
EXHIBIT 99.2
[PHAMIS LETTERHEAD]
July 31, 1996
To Our Shareholders:
Your Board of Directors recently adopted a shareholder rights plan by
declaring a distribution of one Right on each outstanding share of PHAMIS Common
Stock. Each right will initially entitle stockholders of record on July 31,
1996 to buy one one-thousandth of one share of PHAMIS Series A Junior
Participating Preferred Stock, at an exercise price per one one-thousandth share
of $105. The Rights will not be exercisable, however, unless some person or
group acquires 15% of PHAMIS Common Stock or makes a tender or exchange offer
for such amount of the Common Stock. Stockholders exceeding such ownership
limit at the adoption of the plan will not trigger the exercise of the Rights.
The Rights are designed to permit PHAMIS shareholders to benefit from the
long-term value of the Company and to assure that stockholders receive fair and
equal treatment in the event of a hostile takeover of the Company. In
fashioning the Rights, your Board was concerned with protecting PHAMIS
shareholders against being rushed into selling their shares or being forcibly
squeezed out of their equity investment at an unfair price in the event of a
hostile takeover attempt by any person or group, and certain control shareholder
abusive tactics. The Rights are not being distributed in response to any
specific effort to acquire control of the Company.
The Rights Plan is being adopted in order to assure the ability of the
board to protect your interests. The Rights are not intended to prevent a
takeover of the Company and will not do so. However, they should deter any
attempt to acquire the Company in a manner or on terms not approved by the
Board.
The issuance of the Rights has no dilutive effect, will not affect reported
earnings per share, is not taxable to the Company or to you, and will not change
the way in which you can presently trade the Company's shares. However,
shareholders may, depending upon their individual circumstances, recognize
taxable income when the Rights become exercisable.
The Rights will be issued on July 31, 1996 to shareholders of record on
that date and will expire in ten years. Initially, the Rights will not be
exercisable, certificates will not be sent to you, and the Rights will
automatically trade with the common shares. However, ten days after a person or
group either acquires 15% or more of the Company's shares, or announces an offer
the consummation of which would result in such person or group owning such
number of the shares (even if no purchases actually occur), the Rights will
become exercisable and separate certificates representing the Rights will be
distributed. We expect that the Rights will begin to trade independently from
the Company's shares at that time. At no time will the Rights have any voting
power.
When the Rights first become exercisable, a holder will be entitled to buy
from the Company one one-thousandth of a share of a new series of preferred
stock for $105. If the Company is involved in a merger or other business
combination, or sells 50% or more of its assets or earning power, at any time
after the Rights become exercisable, the Rights will be modified so as to
entitle a holder to buy a number of shares of common stock of the acquiring
company having a market value of twice the exercise price of each Right. Also,
if any person or group acquires 15% or more of the Company's outstanding common
stock the Rights will entitle a holder to buy a number of additional shares of
common stock of PHAMIS having a market value of twice the exercise price of each
Right.
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<PAGE>
At the time some person or group acquires 15% or more of the Company's
shares, the Rights held by the person or group will automatically become void
and not exercisable by anyone thereafter.
For example, at an exercise price of $105 per Right, each Right not owned
by a person who has acquired 15% or more of the Company's shares (or by certain
related parties) would entitle its holder to purchase $210 worth of Company
common stock for $105. Assuming that the common stock had a per share value of
$21 at such time, the holder of each valid Right would be entitled to purchase
ten shares of common stock for $105.
The Rights may be redeemed by the Board of Directors at $.01 per Right up
until ten days after the accumulation, through open-market purchases, a tender
offer or otherwise, of 15% or more of the Company's shares by a single acquiror
or group and thus they should not interfere with any merger or business
combination approved by the Board of Directors prior to that time.
In declaring the Rights dividend, we have expressed our confidence in the
future and our determination that you, our shareholders, be given every
opportunity to participate fully in that future.
On behalf of the Board of Directors,
Frank T. Sample,
President and Chief Executive Officer
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