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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMPDENT CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 04-3185995
- ------------------------------- ---------------
(State or other jurisdiction (IRS employer
of incorporation) identification no.)
8800 ROSWELL ROAD, SUITE 295, ATLANTA, GEORGIA 30350
(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered to be registered
------------------- ----------------------
NONE NONE
Securities to be registered pursuant to Section 12(g) of the Act:
PREFERRED STOCK PURCHASE RIGHTS
-------------------------------
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
On August 16, 1996, the Board of Directors of the Company adopted a
Shareholder Rights Agreement (the "Rights Agreement"). The following
description of the terms of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
which is attached hereto as an exhibit and is incorporated herein by reference.
Pursuant to the terms of the Rights Agreement, the Board of Directors
declared a dividend distribution of one Preferred Stock Purchase Right (a
"Right") for each outstanding share of Common Stock of the Company (the "Common
Stock") to stockholders of record as of the close of business on September 4,
1996 (the "Record Date"). In addition, one Right will automatically attach to
each share of Common Stock issued between the Record Date and the Distribution
Date (as hereinafter defined). Each Right entitles the registered holder
thereof to purchase from the Company a unit consisting of one ten-thousandth of
a share (a "Unit") of Series A Junior Participating Cumulative Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), at a cash exercise price of
$185.00 per Unit (the "Exercise Price"), subject to adjustment.
Initially, the Rights are not exercisable and are attached to and
trade with all outstanding shares of Common Stock outstanding as of, and issued
subsequent to, the Record Date. The Rights will separate from the Common Stock
and will become exercisable upon the earliest of (i) the close of business on
the tenth calendar day following the first public announcement that a person or
group of affiliated or associated persons has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock (an "Acquiring Person")
(the date of said announcement being referred to as the "Stock Acquisition
Date"), (ii) the close of business on the tenth business day (or such other day
as the Board of Directors may determine) following the commencement of a tender
offer or exchange offer that would result upon its consummation in a person or
group becoming the beneficial owner of 15% or more of the outstanding shares of
Common Stock or (iii) the determination by the Board of Directors that any
person is an "Adverse Person" (the earliest of such dates being herein referred
to as the "Distribution Date").
The Board of Directors may declare a person to be an Adverse Person
after a determination that such person, alone or together with its affiliates
and associates, has become the beneficial owner of 10% or more of the
outstanding shares of Common Stock and a determination by the Board of
Directors, after reasonable inquiry and investigation, including such
consultation, if any, with such persons as the directors shall deem
appropriate, that (a) such beneficial ownership by such person is intended to
cause, is reasonably likely to cause or will cause the Company to repurchase
the Common Stock beneficially owned by such person or to cause pressure on the
Company to take action or enter into a transaction or series of transactions
which would provide such person with short-term financial gain under
circumstances where the Board of Directors determines that the best long-term
interests of the
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Company and its stockholders, but for the actions and possible actions of such
person, would not be served by taking such action or entering into such
transaction or series of transactions at that time or (b) such beneficial
ownership is causing, or is reasonably likely to cause, a material adverse
impact (including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company. No delay or failure by
the Board of Directors to declare a person to be an Adverse Person shall in any
way waive or otherwise affect the power of the Board of Directors subsequently
to declare a person an Adverse Person. In the event that the Board of
Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such persons as the Board of
Directors shall deem appropriate, that such person has not met or complied with
any condition specified by the Board of Directors, the Board of Directors may
at any time thereafter declare the person to be an Adverse Person.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (a) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (b) new Common Stock certificates issued after the Record Date
will contain a notation incorporating the Shareholder Rights Agreement by
reference, and (c) the surrender for transfer of any certificates for Common
Stock will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on August 16, 2006, unless previously redeemed
or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right 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 Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, proper provision will
be made so that each holder of a Right (other than an Acquiring Person, an
Adverse Person or their associates or affiliates, whose Rights shall become
null and void) will thereafter have the right to receive upon exercise that
number of Units of Preferred Stock of the Company having a market value of two
times the exercise price of the Right (such right being referred to as the
"Subscription Right"). In the event that, at any time following the Stock
Acquisition Date, (i) the Company consolidates with, or merges with and into,
any other person, and the Company is not the continuing or surviving
corporation, (ii) any person consolidates with the Company, or merges with and
into the Company and the Company is the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock
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are changed into or exchanged for stock or other securities of any other person
or cash or any other property, or (iii) 50% or more of the Company's assets or
earning power is sold, mortgaged or otherwise transferred, each holder of a
Right shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a market value equal to two times the exercise
price of the Right (such right being referred to as the "Merger Right"). The
holder of a Right will continue to have the Merger Right whether or not such
holder has exercised the Subscription Right. Rights that are or were
beneficially owned by an Acquiring Person or an Adverse Person may (under
certain circumstances specified in the Rights Agreement) become null and void.
At any time after the Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, the Board of Directors
may, at its option, exchange all or any part of the then outstanding and
exercisable Rights for shares of Common Stock or Units of Preferred Stock at an
exchange ratio of one share of Common Stock or one Unit of Preferred Stock per
Right. Notwithstanding the foregoing, the Board of Directors generally will
not be empowered to effect such exchange at any time after any person becomes
the beneficial owner of 50% or more of the Common Stock of the Company.
The Exercise Price payable, and the number of Units 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 Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Units. If the Company
elects not to issue fractional Units, in lieu thereof an adjustment in cash
will be made based on the fair market value of the Preferred Stock on the last
trading date prior to the date of exercise. Any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company at any
time prior to the Distribution Date.
The Rights may be redeemed in whole, but not in part, at a price of
$0.01 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors only until the
earliest of (i) the date on which a person is declared to be an Adverse Person,
(ii) the close of business on the tenth calendar day after the Stock
Acquisition Date, or (iii) the expiration date of the Rights Agreement.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will
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terminate and thereafter the only right of the holders of Rights will be to
receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its
sole discretion until the Distribution Date. After the Distribution Date, the
Board of Directors may, subject to certain limitations set forth in the Rights
Agreement, amend the Rights Agreement only to cure any ambiguity, defect or
inconsistency, to shorten or lengthen any time period, or to make changes that
do not adversely affect the interests of Rights holders (excluding the
interests of an Acquiring Person, an Adverse Person or their associates or
affiliates). In addition, the Board of Directors may at any time prior to such
time as any person becomes an Acquiring Person amend the Rights Agreement to
lower the threshold at which a person becomes an Acquiring Person to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Stock then owned by any person and (ii) 10%.
Until a Right is exercised, the holder will have no rights as a
stockholder of the Company (beyond those as an existing stockholder), including
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 Units, other securities of the Company, other
consideration or for common stock of an acquiring company.
The certificate of vote of directors establishing the Preferred Stock
and the form of Right Certificate are attached as Exhibits A and B,
respectively, to the Rights Agreement (which is included as Exhibit 1 to this
Form 8-A). The foregoing 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.
Item 2 - Exhibits
Exhibit 1 Shareholder Rights Agreement,
dated August 16, 1996, between CompDent
Corporation and State Street Bank and
Trust Company, as Rights Agent.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
COMPDENT CORPORATION
Date: August 16, 1996 By: /s/ David R. Klock
-------------------------------------
David R. Klock
President and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
1 Shareholder Rights Agreement, dated August 16, 1996,
between CompDent Corporation and State Street Bank and
Trust Company, as Rights Agent
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EXHIBIT 1
________________________________________________________________________________
CompDent Corporation
and
State Street Bank and Trust Company,
as Rights Agent
______________________
Shareholder Rights Agreement
Dated as of August 16, 1996
________________________________________________________________________________
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
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<S><C> <C>
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Exercise of Rights; Exercise Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Reservation and Availability of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights . . . . . . . . . . . . . . . . . . 14
12. Certificate of Adjusted Exercise Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . 24
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
17. Right Certificate Holder Not Deemed a Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C> <C>
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
29. Determinations and Actions by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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Exhibit A -- Certificate of Designation of
Series A Junior Participating
Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
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SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of August 16, 1996, between CompDent Corporation, a
Delaware corporation (the "Company"), and State Street Bank and Trust Company,
a Massachusetts trust company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, on August 16, 1996, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as such term is
hereinafter defined) for each outstanding share of Common Stock, par value
$0.01 per share, of the Company outstanding as of the close of business on
September 4, 1996 (the "Record Date"), and contemplates the issuance of one
Right for each share of Common Stock of the Company issued (whether originally
issued or sold from the Company's treasury) between the Record Date and the
earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase
one ten-thousandth of a share of Series A Junior Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth on Exhibit A hereto, 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 any Person (as
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the shares of Common Stock of the Company then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary (as
such term is hereinafter defined) of the Company, (iii) any employee benefit
plan or compensation arrangement of the Company or any Subsidiary of the
Company or (iv) any Person holding shares of Common Stock of the Company
organized, appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such employee benefit plan or
compensation arrangement (the Persons described in clauses (i) through (iv)
above are referred to herein as "Exempt Persons").
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Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of the Company's Common Stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional shares (other than pursuant to a
stock split, stock dividend or similar transaction) of Common Stock of the
Company and immediately thereafter be the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding, then such Person
shall be deemed to be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of shares of
Common Stock of the Company so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1(a).
(b) "Adverse Person" shall mean any Person declared to be
an Adverse Person by the Board of Directors upon a determination of the Board
of Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such
Person.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations (the "Rules") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement; provided,
however, that no Person who is a director or officer of the Company shall be
deemed an Affiliate or an Associate of any other director or officer of the
Company solely as a result of his or her position as director or officer of the
Company.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 of the Rules under the Exchange Act,
as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has:
(A) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time or upon the satisfaction of any conditions or both)
pursuant to any agreement, arrangement or understanding
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(whether or not in writing) (other than customary agreements with and
between underwriters and selling group members with respect to a bona
fide public offering of securities) or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (1)
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange;
(2) securities issuable upon exercise of these Rights at any time prior
to the occurrence of a Triggering Event; or (3) 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 or pursuant to
Sections 3(a), 11(i) or 22 hereof; or
(B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Rules
of the Exchange Act and (2) is not also then reportable by such
person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(C) the right to dispose of pursuant to
any agreement, arrangement or understanding (whether or not in
writing) (other than customary arrangements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities); 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) (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of Section
1(d)(ii) hereof) or disposing of any securities of the Company;
provided, however, that (1) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition, and (2) no Person who is a director or an officer of the Company
shall be deemed, as a result of his or her position as director or officer of
the Company, the Beneficial Owner of any securities of the Company that are
beneficially owned
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by any other director or officer of the Company.
(e) "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.
(f) "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.
(g) "Common Stock" when used in reference to the Company
shall mean the common stock, par value $0.01 per share, of the Company or any
other shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean (i) the capital
stock or other equity interest of such Person with the greatest voting power,
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or (iii) if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first-
mentioned Person and which have issued any such outstanding capital stock,
equity securities or equity interest. "Common Stock" when used with reference
to any Person not organized in corporate form shall mean units of beneficial
interest which (x) shall represent the right to participate generally in the
profits and losses of such Person (including without limitation any
flow-through tax benefits resulting from an ownership interest in such Person)
and (y) shall be entitled to exercise the greatest voting power of such Person
or, in the case of a limited partnership, shall have the power to rename the
general partner or partners.
(h) "Distribution Date" shall have the meaning defined in
Section 3(a) hereof.
(i) "Exercise Price" shall have the meaning defined in
Section 4(a) hereof.
(j) "Expiration Date" and "Final Expiration Date" shall
have the meanings set forth in Section 7(a) hereof.
(k) "Fair Market Value" of any securities or other property
shall be as determined in accordance with Section 11(d) hereof.
(l) "Person" shall mean an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust,
a government or political subdivision, any unincorporated organization, or any
other association or entity, and includes, without limitation, an
unincorporated group of persons who, by formal or informal agreement, have
embarked on a common purpose or act.
(m) "Preferred Stock" shall mean shares of Series A Junior
Participating
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Cumulative Preferred Stock, par value $0.01 per share, of the Company having
the rights and preferences set forth in the form of Certificate of Designation
attached hereto as Exhibit A.
(n) "Preferred Stock Equivalents" shall have the meaning
set forth in Section 11(b) hereof.
(o) "Principal Party" shall have the meaning defined in
Section 13(b) hereof.
(p) "Redemption Price" shall have the meaning defined in
Section 23 hereof.
(q) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(r) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(s) "Stock Acquisition Date" shall mean the date of the
first public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(t) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interest
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions of such corporation or other entity are at the time directly or
indirectly beneficially owned or otherwise controlled by such Person and any
Affiliate of such Person.
(u) "Triggering Event" shall mean any Section 11(a)(ii)
13 Event
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
(as hereinafter defined in Section 3(a)) 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. In the event the
Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agent and any Co-Rights Agents shall be as the Company shall determine.
The Company shall give notice to the Rights Agent of the appointment of one or
more Co-Rights Agents and the respective duties of the Rights Agent and any
such Co-Rights Agents.
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<PAGE> 10
Section 3. Issue of Right Certificates.
(a) From the date hereof until the earlier of (i) the close
of business on the tenth calendar day after the Stock Acquisition Date, (ii)
the close of business on the tenth Business Day (or such other calendar day, if
any, as the Board of Directors may determine in its sole discretion) after the
date of the commencement by any Person, other than an Exempt Person, of a
tender or exchange offer if, upon consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the shares of Common Stock of the
Company then outstanding or (iii) the determination by the Board of Directors
of the Company, pursuant to the criteria set forth in Section 11(a)(ii)(B)
hereof, that a Person is an Adverse Person (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights) (the
earliest of such dates being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for the Common Stock of the Company registered in
the names of the holders of the Common Stock of the Company (which certificates
for Common Stock of the Company 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 of the Company. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Rights Agent will, at the Company's expense send, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock of the Company
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 certificates, in
substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each share of Common Stock of the Company so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock of the Company has been made
pursuant to Section 11(o) hereof, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) at
the time of distribution of the Right Certificates, so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the close of business on the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) With respect to certificates for the Common Stock of
the Company issued prior to the close of business on the Record Date, the
Rights will be evidenced by such certificates for the Common Stock of the
Company on or until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), and the registered holders of the
Common Stock of the Company also shall be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the transfer of any of the
certificates for the Common Stock of the Company outstanding prior to the date
of this Agreement shall also constitute the transfer of the Rights associated
with the Common Stock of the Company represented by such certificate.
(c) Certificates for the Common Stock of the Company
issued after the
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<PAGE> 11
Record Date, but prior to the earlier of the Distribution Date or the
redemption, expiration or termination of the Rights, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form set
forth below:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Rights Agreement
between CompDent Corporation and State Street Bank and Trust
Company, as Rights Agent, dated as of August 16, 1996, as
amended, restated, renewed or extended from time to time (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 CompDent Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. CompDent Corporation may redeem
the Rights at a redemption price of $0.01 per Right, subject to
adjustment, under the terms of the Rights Agreement. CompDent
Corporation 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, Rights issued to or held
by Acquiring Persons, Adverse Persons or any Affiliates or
Associates thereof (as defined in the Rights Agreement), and any
subsequent holder of such Rights, may become null and void. The
Rights shall not be exercisable, and shall be void so long as
held, by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the exercise by
such holder, of the Rights in such jurisdiction shall not have
been obtained or be obtainable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock of the Company represented by such
certificates shall be evidenced by such certificates alone until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificates. In the event that the Company purchases or
acquires any shares of Common Stock of the Company after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock of
the Company shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
of the Company which are no longer outstanding. The failure to print the
foregoing legend on any such Common Stock of the Company certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
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<PAGE> 12
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the reverse
thereof) shall each be substantially in the form of 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, rule or regulation 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 customary usage. The Rights Certificates shall be in
a machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 11 and Section 22 hereof, the
Right Certificates, whenever distributed, shall be dated as of the Record Date,
shall show the date of countersignature, and on their face shall entitle the
holders thereof to purchase such number of one ten-thousandths of a share of
Preferred Stock as shall be set forth therein at the price set forth therein
(the "Exercise Price"), but the number of such shares and the Exercise Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by (i) an
Acquiring Person, an Adverse Person or any Associate or Affiliate of an
Acquiring Person or an Adverse Person, (ii) a transferee of an Acquiring Person
or an Adverse Person (or of any Associate or Affiliate of an Acquiring Person
or an Adverse Person) who becomes a transferee after the Acquiring Person or
Adverse Person becomes such, or (iii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or Adverse Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person or Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person or to any Person
with whom the Acquiring Person or Adverse 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 of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) hereof, and
any Right Certificate issued pursuant to Section 6, Section 11 or Section 22
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person, an Adverse Person or an Affiliate or an Associate of an
Acquiring Person or an Adverse Person (as such terms are defined
in the Rights Agreement). This Right
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<PAGE> 13
Certificate and the Rights represented hereby may become null and void
under certain circumstances as specified in Section 7(e) of the Rights
Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or Adverse Person
or any Associate or Affiliate thereof. The Company shall instruct the Rights
Agent in writing of the Rights which should be so legended. The failure to
print the foregoing legend on any such Right Certificate or any defect therein
shall not affect in any manner whatsoever the application or interpretation of
the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board of Directors, or its President or any
Vice President and by its Treasurer or any Assistant Treasurer, or by its
Secretary or any Assistant Secretary, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested to by the Secretary or any Assistant Secretary
of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by an authorized signatory of the
Rights Agent 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 Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by an authorized
signatory of the Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right Certificates
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated as the appropriate
place for surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 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
9
<PAGE> 14
the close of business on the Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Certificates, entitling the registered holder to purchase
a like number of one ten-thousandths of a share of Preferred Stock (or
following a Triggering Event, preferred stock, cash, property, debt securities,
Common Stock or any combination thereof) as the Right Certificate or
Certificates surrendered then entitled such holder to purchase and at the same
Exercise Price. Any registered holder desiring to transfer, split up, combine
or exchange any Right Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Certificates
to be transferred, split up, combined or exchanged, with the form of assignment
and certificate duly executed, at the 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 Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Certificates, as the case may be, as so requested. The
Company may require payment by the registered holder of a Right Certificate, of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security 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 Right Certificate, if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Exercise
Price for the total number of one ten-thousandths of a share of Preferred Stock
(or other securities, cash or other assets, as the case may be) as to which
such surrendered Rights are then exercised, at or prior to the earlier of (i)
the close of business on August 16, 2006 (the
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<PAGE> 15
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof (the earlier of (i), (ii) or (iii)
being herein referred to as the "Expiration Date"). Except as set forth in
Section 7(e) hereof and notwithstanding any other provision of this Agreement,
any Person who prior to the Distribution Date becomes a record holder of shares
of Common Stock may exercise all of the rights of a registered holder of a
Right Certificate with respect to the Rights associated with such shares of
Common Stock in accordance with the provisions of this Agreement, as of the
date such Person becomes a record holder of shares of Common Stock.
(b) The Exercise Price for each one ten-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
$185.00, shall be subject to adjustment from time to time as provided in
Section 11 and Section 13 hereof and shall be payable in lawful money of the
United States of America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, accompanied by payment of the
Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of Preferred Stock (or make available, if
the Rights Agent is the transfer agent therefor) certificates for the number of
one ten-thousandths 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 ten-thousandths 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) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate. In
the event that the Company is obligated to issue other securities of the
Company (including Common Stock of the Company), pay cash or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash or other property
are available for distribution by the Rights Agent, if and when appropriate.
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<PAGE> 16
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person, an Adverse Person or any
Associate or Affiliate of an Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any Associate or
Affiliate of an Acquiring Person or an Adverse Person) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such or (iii) a transferee
of an Acquiring Person or an Adverse Person (or of any Associate or Affiliate
of an Acquiring Person or an Adverse Person) who becomes a transferee prior to
or concurrently with the Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders of equity
interests in such Acquiring Person or Adverse Person or to any Person with whom
the Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined 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 Right Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or Adverse Person or any Affiliates or Associates of an Acquiring Person
or an Adverse Person or any transferee of any of them 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 Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled
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<PAGE> 17
by it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred 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 or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding and exercisable Rights.
(b) The Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance to be listed, upon official notice of
issuance, upon the principal national securities exchange, if any, upon which
the Common Stock of the Company is listed or, if the principal market for the
Common Stock of the Company is not on any national securities exchange, to be
eligible for quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or any successor thereto or other
comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the 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 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing and (iii) cause such registration statement to remain
effective (with a prospectus that at all times meets the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities or (B) the Expiration Date. The Company
will also take such action as may be appropriate under, and which will 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
determined in accordance with the provisions 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 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
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<PAGE> 18
announcement at such time as the suspension is no longer in effect, in each
case with prompt written notice to the Rights Agent. Notwithstanding any such
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(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
Right Certificates or of any certificates for shares of Preferred Stock upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for securities 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 Right Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company are
open. Prior to the exercise of the Right evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder 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 Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided
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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 the
outstanding Preferred Stock, (C) combine 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
Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a
time when the Preferred Stock transfer books of the Company were open,
he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of a Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of a
Right. If an event occurs which would require an adjustment under both
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) Subject to the provisions of Section 24
hereof, in the event
(A) any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, or
(B) the Board of Directors of the Company,
by majority vote, shall declare any Person to be an Adverse
Person, after (x) a determination that such Person, alone or
together with its Affiliates and Associates, has become the
Beneficial Owner of 10% or more of the outstanding shares of
Common Stock of the Company and (y) a determination by the Board
of Directors, after reasonable inquiry and investigation,
including such consultation, if any, with such persons as such
directors shall deem appropriate, that (a) such Beneficial
Ownership by such Person is intended to cause, is reasonably
likely to cause or will cause the Company to repurchase the
Common Stock of the Company beneficially owned by such Person or
to cause pressure on the Company to take action or enter into a
transaction or series of transactions which would provide such
Person with short-term financial gain under circumstances where
the Board
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<PAGE> 20
of Directors determines that the best long-term interests of the Company
and its shareholders, but for the actions and possible actions of such
Person, would not be served by taking such action or entering into such
transactions or series of transactions at that time or (b) such
Beneficial Ownership is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to
maintain its competitive position) on the business or prospects of the
Company. No delay or failure by the Board of Directors to declare a
Person to be an Adverse Person shall in any way waive or otherwise
affect the power of the Board of Directors subsequently to declare a
Person to be an Adverse Person. In the event that the Board of
Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such Persons as the Board of
Directors shall deem appropriate, that such Person has not met or
complied with any condition specified by the Board of Directors, the
Board of Directors may at any time thereafter declare such Person to be
an Adverse Person pursuant to the provisions of this Section
11(a)(ii)(B),
then, and in each such case, promptly following any such occurrence,
proper provision shall be made so that each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof at the then current Exercise Price in
accordance with the terms of this Agreement, such number of shares of
Preferred Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Exercise Price by the then number of one
ten-thousandths 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 exercisable, and
dividing that product by (y) 50% of the Fair Market Value per one
ten-thousandth of a share of the Preferred Stock (determined pursuant to
Section 11(d)) on the date of the occurrence of any one of the events
listed above in this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient
authorized but unissued shares of Preferred Stock to permit the
exercise in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Company shall take all action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights
outstanding and, if necessary, shall use its best efforts to
obtain shareholder approval thereof. Notwithstanding the
foregoing provisions of this Section 11(a)(iii), in lieu of
issuing shares of Preferred Stock in accordance with Section
11(a)(ii) hereof, if a majority of the Directors then in office
determines that such action is necessary or appropriate and is
not contrary to the interests of the holders of the Rights, they
may elect to cause the Company to pay, and if sufficient
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<PAGE> 21
shares of Preferred Stock cannot be issued for such purpose in
accordance with the provisions hereof, the Company shall issue or pay
upon the exercise of the Rights, cash, property, debt securities, shares
of preferred stock or Common Stock, or any combination thereof, having
an aggregate Fair Market Value equal to the Fair Market Value of the
shares of Preferred Stock which otherwise would have been issuable
pursuant to Section 11(a)(ii). Any such election by a majority of the
Directors of the Company must be made and publicly announced within 30
days of the date on which any Section 11(a)(ii) Event first occurs
following the Stock Acquisition Date.
(b) If the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same or
more favorable rights, privileges and preferences as the shares of Preferred
Stock ("Preferred Stock Equivalents")) or securities convertible into Preferred
Stock or Preferred Stock Equivalents at a price per share of Preferred Stock or
per share of Preferred Stock Equivalents (or having a conversion price per
share, if a security convertible into Preferred Stock or Preferred Stock
Equivalents) less than the Fair Market Value (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record date, the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock to be offered (and the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Fair Market
Value 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 Preferred Stock Equivalents to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of a Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be the Fair Market Value thereof determined
in accordance with Section 11(d) hereof. 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 adjustments 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 Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
(c) If the Company shall fix a record date for the making
of a distribution
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<PAGE> 22
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 or surviving 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
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(b)), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one ten-thousandth of a share of Preferred Stock on such record date, less
the Fair Market Value (as determined pursuant to Section 11(d) hereof) of the
portion of the cash, assets or evidences of indebtedness so to be distributed
or of such convertible securities, subscription rights or warrants applicable
to one ten-thousandth of a share of Preferred Stock and the denominator of
which shall be the Fair Market Value (as determined pursuant to Section 11(d)
hereof) per one ten-thousandth of a share of Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of a Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of a Right. 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 Exercise Price shall again be adjusted to
be the Exercise Price which would be in effect if such record date had not been
fixed.
(d) For the purpose of this Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock of the Company or any
other stock or any Right or other security or any other property shall be
determined as provided in this Section 11(d).
(i) In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to
be the average of the daily closing prices per share of such
stock or per unit of such other security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that
the Fair Market Value per share of any share of stock is
determined during a period following the announcement by the
issuer of such stock of (x) a dividend or distribution on such
stock payable in shares of such stock or securities convertible
into shares of such stock or (y) any subdivision, combination or
reclassification of such stock, and prior to the expiration of
the 30 Trading Day period after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each
such case, the Fair Market Value 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,
18
<PAGE> 23
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 securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which such security is listed or admitted to
trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if not
so quoted, the average of the last quoted high bid and low asked
prices) in the over-the-counter market, as reported by NASDAQ or
such other system then in use; or, if on any such date no bids
for such security are 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 such security
selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in such security,
the Fair Market Value of such security on such date shall be
determined reasonably and with utmost good faith to the holders
of the Rights by the Board of Directors of the Company,
provided, however, that if at the time of such determination
there is an Acquiring Person or an Adverse Person, the Fair
Market Value of such security on such date shall be determined
by a nationally recognized investment banking firm selected by
the Board of Directors, which 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. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted
to trading is open for the transaction of business or, if such
security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value
per share of stock or per other unit of such security,
determined reasonably and with utmost good faith to the holders
of the Rights by the Board of Directors of the Company,
provided, however, that if at the time of such determination
there is an Acquiring Person or an Adverse Person, the Fair
Market Value of such security on such date shall be determined
by a nationally recognized investment banking firm selected by
the Board of Directors, which 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; provided,
however, that for the purposes of making any adjustment provided
for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than the product of
the then Fair Market Value of a share of Common Stock of the
Company multiplied by the higher of the then Dividend Multiple
or Vote Multiple (as both of such terms are defined in the
19
<PAGE> 24
Certificate of Designation attached as Exhibit A hereto)
applicable to the Preferred Stock and shall not exceed 105% of
the product of the then Fair Market Value of a share of Common
Stock of the Company multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred
Stock.
(iii) In the case of property other than securities,
the Fair Market Value thereof shall be determined reasonably and
with utmost good faith to the holders of Rights by the Board of
Directors of the Company, provided, however, that if at the time
of such determination there is an Acquiring Person or an Adverse
Person, the Fair Market Value of such property on such date
shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the
Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-millionth of a share of Common Stock of
the Company or hundred-millionth of a share of Preferred Stock, as the case may
be, or to such other figure as the Board of Directors may deem appropriate.
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 any provision of Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11(a), (b), (c), (e), (g) through (k) and
(m), inclusive, 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 Exercise Price hereunder shall evidence the right
to purchase, at the adjusted Exercise Price, the number of one ten-thousandths
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.
20
<PAGE> 25
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Exercise
Price as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of one ten-thousandths of a share of Preferred Stock (calculated
to the nearest one hundred-millionth) obtained by (i) multiplying (x) the
number of one ten-thousandths of a share of Preferred Stock for which a Right
may be exercisable immediately prior to this adjustment by (y) the Exercise
Price in effect immediately prior to such adjustment of the Exercise Price
and (ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares 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 ten-thousandths 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-millionth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
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 Exercise Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Exercise Price or the number of one ten-thousandths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Exercise Price
per share and the number of shares which were expressed in the initial
21
<PAGE> 26
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the number
of one ten-thousandths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one ten-thousandths of a share of Preferred Stock or other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one ten-thousandths 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 Exercise Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less than
the Fair Market Value, 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, stock dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, 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 50% or
more of the assets or earning power of the Company and its Subsidiaries taken
as a whole, to any other Person or Persons if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights, warrants or
other instruments outstanding or agreements or arrangements in effect which
would substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale the
22
<PAGE> 27
shareholders of a Person who constitutes, or would constitute, the "Principal
Party" for the 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. The Company further covenants and agrees that after the
Distribution Date it will not, except as permitted by Section 23 or Section 27
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
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) In the event the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare or pay
any dividend on the outstanding Common Stock of the Company payable in shares
of Common Stock of the Company or (ii) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock of the Company (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock of the Company) into a greater or lesser number of shares of Common Stock
of the Company, then in any such case (A) the number of one ten-thousandths of
a share of Preferred Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one ten-thousandths
of a share of Preferred Stock so purchasable immediately prior to such event by
a fraction, the numerator of which is the number of shares of Common Stock of
the Company outstanding immediately prior to such event and the denominator of
which is the number of shares of Common Stock of the Company outstanding
immediately after such event, and (B) each share of Common Stock of the Company
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each share of Common Stock of the Company
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(o) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(p) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights of holders of Right
Certificates under this Rights Agreement, including rights to purchase
securities of the Principal Party following a Section 13 Event which has
occurred or may thereafter occur, as set forth in Section 13 hereof. Upon
exercise of a Right Certificate under Section 11(a)(ii), the Rights Agent shall
return such Right Certificate duly marked to indicate that such exercise has
occurred.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 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 of the Company a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully
23
<PAGE> 28
protected in relying on any such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of any such adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(n) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction
which is not prohibited by Section 11(n) hereof) shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock of the Company shall be
changed into or exchanged for stock or other securities of any other Person or
cash or any other property, or (z) the Company shall sell, mortgage or
otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any Subsidiary of the Company in one or more
transactions, each of which is not prohibited by Section 11(n) hereof), then,
and in each such case, proper provision shall be made so that: (i) each holder
of a Right, except as provided in Section 7(e) hereof, shall have the right to
receive, upon the exercise thereof at the then current Exercise Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid and nonassessable shares of freely tradeable Common
Stock of the Principal Party (as hereinafter defined in Section 13(b)), free
and clear of rights of call or first refusal, liens, encumbrances or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Exercise Price by the number of one ten-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event, and dividing that product by (2) 50% of the
Fair Market Value (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale, mortgage or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply to such Principal Party; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock to permit
exercise of all outstanding Rights in accordance with this Section 13(a) and
the making of payments in cash and/or other securities in accordance with
Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions
24
<PAGE> 29
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.
(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 in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to the
merger or consolidation; 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, (x) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary or Affiliate of another Person the
Common Stock of which is and has been so registered, "Principal Party" shall
refer to such other Person; (y) in case such Person is a direct or indirect
Subsidiary or Affiliate 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 of shares outstanding; and (z) in case such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (x) and (y) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a "Subsidiary"
of both or all of such joint venturers and the Principal Parties in each such
chain shall bear the obligations set forth in this Section 13 in the same ratio
as their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto (x) 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 (y) the Company and
each Principal Party and each other Person who may become a Principal Party as
a result of such consolidation, merger, sale or transfer shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), the Principal Party at its own expense will:
25
<PAGE> 30
(i) prepare and file a registration
statement under the Securities Act with respect to the Rights
and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing
and use its best efforts to cause such registration statement to remain
effective (with a prospectus that at all times meets the requirements
of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be
necessary or appropriate;
(iii) use its best efforts to list (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on a national securities exchange or to meet the
eligibility requirements for quotation on NASDAQ; and
(iv) deliver to holders of the Rights
historical financial statements for the Principal Party and each of
its Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers.
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(o)
hereof, or to distribute Right Certificates which evidence fractional Rights.
If the Company elects not to issue such fractional Rights, the Company shall
pay, in lieu of such fractional Rights, to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one ten-thousandth of a share of Preferred Stock) 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 ten-thousandth
of a share of Preferred Stock). In lieu of fractional shares of Preferred
Stock that are not integral multiples of one ten-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the Fair Market Value of one
ten-thousandth of a share of Preferred Stock. For purposes of this Section
14(b), the Fair Market Value of one ten-thousandth of a share
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<PAGE> 31
of Preferred Stock shall be determined pursuant to Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his 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, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company), without the consent of the Right Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common
Stock of the Company), may, on his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to exercise the
Right evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and 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. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Right Certificate (or, prior to the Distribution Date,
the associated certificate of Common Stock of the Company) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or
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<PAGE> 32
writing on the Right Certificates or the associated certificates of Common
Stock of the Company made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as the 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 obligations; provided, however, that the
Company must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the
Rights Agent for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
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
gross 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 arising therefrom,
directly or indirectly. The provisions of this Section 18(a) shall survive the
expiration of the Rights and the termination of this
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<PAGE> 33
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock of the Company, Preferred Stock, or
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons.
(c) The Rights Agent shall not be liable for consequential
damages under any provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder.
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 or 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, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
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<PAGE> 34
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
selected by it (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
or Adverse Person and the determination of "Fair Market Value") 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 shall be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, the President, a Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company and delivered
to the Rights Agent. Any such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Sections 11, 13 or 23(c) 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 Right Certificates
after receipt of a certificate describing
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<PAGE> 35
any such adjustment furnished in accordance with Section 12 hereof), nor shall
it be responsible for any determination by the Board of Directors of the
Company of the Fair Market Value of the Rights or Preferred Stock pursuant to
the provisions of Section 14 hereof; 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 of the Company or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock of the Company or Preferred Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person
believed by the Rights Agent to be the Chairman of the Board of Directors, any
Vice Chairman of the Board of Directors, the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, and is authorized 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. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in such application on or after the date specified in
such application (which date shall not be less than five Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
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(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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or to
the holders of the Rights resulting from any such act, omission, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause (1) or
clause (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 by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) 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 of the Company and Preferred Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the
State of Georgia or the State of New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of Georgia or the State of New York), in good
standing, which is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or examination by federal
or state authority and which has at
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the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate of a corporation 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 execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock of the Company and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock of
the Company 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 of the Company so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, 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 of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustments
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any
dividend declared or paid on the Common Stock of the Company in shares of
Common Stock of the Company or any subdivision or combination of the
outstanding shares of Common Stock of the Company or similar event
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occurring after the date of this Agreement (such redemption price, as adjusted
from time to time, being hereinafter referred to as the "Redemption Price").
The Rights may be redeemed only until the earliest to occur of (i) 5:00 P.M.,
Atlanta, Georgia time, on the tenth calendar day after the Stock Acquisition
Date, (ii) the declaration by the Board of Directors that any Person is an
Adverse Person or (iii) the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price 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 the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock of the Company. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or Section 24 hereof or in connection with the
purchase of shares of Common Stock of the Company prior to the Distribution
Date.
(c) The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock of the Company (based on the Fair Market
Value of the Common Stock of the Company as of the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time on or after the 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 shares of Common Stock of the Company at an exchange
ratio of one share of Common Stock of the Company 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 an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock of the Company.
(b) Immediately upon the action of the Company ordering the
exchange
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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 of the Company equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give notice of any such exchange in accordance with
Section 26 hereof; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. Each such
notice of exchange will state the method by which the exchange of the shares of
Common Stock of the Company 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 preferred stock
equivalent, as such term is defined in Section 11(b) hereof) for Common Stock
of the Company exchangeable for Rights, at the initial rate of one
ten-thousandth of a share of Preferred Stock (or preferred stock equivalent)
for each share of Common Stock of the Company, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Stock pursuant to the
terms thereof, so that the fraction of a share of Preferred Stock delivered in
lieu of each share of Common Stock of the Company shall have the same voting
rights as one share of Common Stock of the Company.
(d) In the event that there shall not be sufficient shares
of Common Stock of the Company or Preferred Stock (or preferred stock
equivalent) issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock of the Company or Preferred Stock (or preferred stock
equivalent) for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Stock of the Company or to distribute certificates which evidence
fractional shares of Common Stock of the Company. If the Company elects not to
issue such fractional shares of Common Stock of the Company, the Company shall
pay, in lieu of such fractional shares of Common Stock of the Company, to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock of the Company would otherwise be issuable,
an amount in cash equal to the same fraction of the Fair Market Value of a
whole share of Common Stock of the Company. For the purposes of this paragraph
(e), the Fair Market Value of a whole share of Common Stock of the Company
shall be the closing price of a share of Common Stock of the Company (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.
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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 of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with, or to effect any sale, mortgage or other
transfer (or to permit one or more of its Subsidiaries to effect any sale,
mortgage or other transfer), in one transaction or a series of related
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than a
Subsidiary of the Company in one or more transactions each of which is not
prohibited by Section 11(n) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, (vi) to declare or pay any dividend
on the Common Stock of the Company payable in Common Stock of the Company or to
effect a subdivision, combination or consolidation of the Common Stock of the
Company (by reclassification or otherwise than by payment of dividends in
Common Stock of the Company) then in each such case, the Company shall give to
each holder of a Right Certificate and to the Rights Agent, 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 Common Stock
of the Company and/or 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 Common Stock of the
Company and/or Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then,
in any such case, the Company shall as soon as practicable thereafter give to
each registered holder of a Right Certificate and to the Rights Agent, 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.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid,
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addressed (until another address is filed in writing with the Rights Agent) as
follows:
CompDent Corporation
8800 Roswell Road
Suite 295
Atlanta, GA 30350
Attention: 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 Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
State Street Bank and Trust Company
c/o Boston EquiServe
150 Royall Street, Mail Stop 45-02-16
Canton, MA 02021
Attention: Shareholder Services Division
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior
to the Distribution Date, to the holder of any certificate representing shares
of Common Stock of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement as the Company may deem
necessary or desirable without the approval of any holders of certificates
representing shares of Common Stock of the Company. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holder
of Right 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 hereof in
any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates (other
than an Acquiring Person, Adverse Person or any Affiliate or Associate of an
Acquiring Person or Adverse Person); provided, however, that from and after the
Distribution Date this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating
to when the Rights may be redeemed at such time as the Rights are not
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then redeemable or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and the benefits
to, the holders of Rights (other than an Acquiring Person, Adverse Person or
any Affiliate or Associate of an Acquiring Person or Adverse Person). Without
limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the threshold
set forth in Section 1(a) to not less than the greater of (i) the sum of .001%
and the largest percentage of the outstanding Common Stock of the Company then
known by the Company to be beneficially owned by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Stock of
the Company for or pursuant to the terms of any such plan) and (ii) 10%. Upon
the delivery of such 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 of the Company. Notwithstanding any other provision hereof, the Rights
Agent's consent must be obtained regarding any amendment or supplement pursuant
to this Section 27 which alters the Rights Agent's rights or duties.
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. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock of the Company outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of the Company 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
Rules under the Exchange Act as in effect on the date hereof. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board 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 the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board 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 any member of the Board of Directors to any
liability to the holders of the Rights or to any other person.
38
<PAGE> 43
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock of the Company) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock of the Company).
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from the Agreement would adversely affect the purpose or
effect of the 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 day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State. The courts of the
State of Delaware and of the United States of America located in the State of
Delaware (the "Delaware Courts") shall have exclusive jurisdiction over any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby, and any Person commencing or otherwise involved in any
such litigation shall waive any objection to the laying of venue of such
litigation in the Delaware Courts and shall not plead or claim in any Delaware
Court that such litigation brought therein has been brought in any inconvenient
forum.
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.
[END OF TEXT]
39
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: COMPDENT CORPORATION
By: /s/ Phyllis Klock By: /s/ David Klock
------------------------------------ ------------------------------
Name: David Klock
Title: Chief Executive Officer
and President
ATTEST: STATE STREET BANK AND TRUST
COMPANY, as Rights Agent
By: /s/ Stephen Cesso By: /s/ Ronald E. Logue
------------------------------------ -----------------------------
Name: Ronald E. Logue
Title: Executive Vice
President
<PAGE> 45
Exhibit A
VOTE OF DIRECTORS ESTABLISHING
SERIES A JUNIOR PARTICIPATING CUMULATIVE
PREFERRED STOCK
of
COMPDENT CORPORATION
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
VOTED, that pursuant to authority conferred upon and vested in the
Board of Directors by the Amended and Restated Certificate of Incorporation, as
amended as of the date hereof (the "Certificate of Incorporation"), of CompDent
Corporation (the "Corporation"), the Board of Directors hereby establishes and
designates a series of Preferred Stock of the Corporation, and hereby fixes and
determines the relative rights and preferences of the shares of such series, in
addition to those set forth in the Certificate of Incorporation, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Cumulative Preferred Stock"
(the "Series A Preferred Stock"), and the number of shares initially
constituting such series shall be 50,000; provided, however, that if more than
a total of 50,000 shares of Series A Preferred Stock shall be issuable upon
the exercise of Rights (the "Rights") issued pursuant to the Shareholder
Rights Agreement dated as of August 16, 1996, between the Corporation and
State Street Bank and Trust Company, as Rights Agent (the "Rights Agreement"),
the Board of Directors of the Corporation, pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware, shall direct by resolution
or resolutions that a certificate be properly executed, acknowledged, filed
and recorded, in accordance with the provisions of Section 103 thereof,
providing for the total number of shares of Series A Preferred Stock
authorized to be issued to be increased (to the extent that the Certificate
of Incorporation then permits) to the largest number of whole shares (rounded
up to the nearest whole number) issuable upon exercise of such Rights.
Section 2. Dividends and Distributions.
(A) (i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of shares of common
stock and of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing
<PAGE> 46
on the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provisions for adjustment hereinafter set forth, 10,000 times
the aggregate per share amount of all cash dividends, and 10,000 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 since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. The multiple of cash and non-cash dividends
declared on the common stock to which holders of the Series A Preferred Stock
are entitled, which shall be 10,000 initially but which shall be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the
"Dividend Multiple." In the event the Corporation shall at any time after
August 16, 1996 (the "Rights Declaration Date") (i) declare or pay any dividend
on common stock payable in shares of common stock, or (ii) 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 Dividend Multiple thereafter applicable to the determination of
the amount of dividends which holders of shares of Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied 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.
(ii) Notwithstanding anything else contained in this
paragraph (A), the Corporation shall, out of funds legally available for that
purpose, declare a dividend or distribution on the Series A Preferred Stock as
provided in this paragraph (A) immediately after it declares a dividend or
distribution on the common stock (other than a dividend payable in shares of
common stock); provided that, in the event no dividend or distribution shall
have been declared on the common stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date,
a dividend of $1.00 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
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
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an
2
<PAGE> 47
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
in accordance with applicable law a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than such number of days prior to the date fixed for the payment thereof as may
be allowed by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
10,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. The number of votes which a holder of a share of Series A
Preferred Stock is entitled to cast, which shall initially be 10,000 but which
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Vote Multiple." In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on
common stock payable in shares of common stock, or (ii) 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 Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled shall be the Vote Multiple immediately prior to such
event multiplied 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 Preferred Stock and the holders of shares of common stock
and the holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as otherwise required by applicable law or as set forth
herein, holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of common stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
3
<PAGE> 48
(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
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 Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) except as permitted in subsection 4(A)(iv) below, redeem,
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
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
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of any stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subsection (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of preferred stock and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation (voluntary or
4
<PAGE> 49
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made (x) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $10,000.00 per share
or (2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 10,000 times the aggregate amount to be
distributed per share to holders of common stock, or (y) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all other such
parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare or pay any dividend on common stock payable in shares of common
stock, or (ii) effect a subdivision or combination or consolidation of the
outstanding shares of common stock (by reclassification or otherwise than by
payment of a dividend in shares of common stock) into a greater or lesser
number of shares of common stock, then in each such case the aggregate amount
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (x) 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.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to
be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
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 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 10,000 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,
plus accrued and unpaid dividends, if any, payable with respect to the Series A
Preferred Stock. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare or pay any dividend on common stock payable
in shares of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the
5
<PAGE> 50
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. Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Ranking. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Vote of Directors Establishing a Class of
Stock relating to a subsequently-designated series of preferred stock of the
Corporation, the Series A Preferred Stock shall rank junior to any other series
of the Corporation's preferred stock subsequently issued, as to the payment of
dividends and the distribution of assets on liquidation, dissolution or winding
up and shall rank senior to the common stock.
Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Vote of Directors shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in whole shares or in any fraction of a share that is one ten-thousandth
(1/10,000th) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
In lieu of fractional shares, the Corporation may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
ten-thousandth (1/10,000th) of a share or any integral multiple thereof.
6
<PAGE> 51
Exhibit B
[Form of Right Certificate]
Certificate No. R-
__________ Rights
NOT EXERCISABLE AFTER AUGUST 16, 2006 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF COMPDENT
CORPORATION, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE SHAREHOLDER
RIGHTS AGREEMENT BETWEEN COMPDENT CORPORATION AND STATE STREET BANK AND TRUST
COMPANY, AS RIGHTS AGENT, DATED AS OF AUGUST 16, 1996 (THE "RIGHTS AGREEMENT").
UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, AN ADVERSE PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
COMPDENT 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 Shareholder Rights Agreement dated as of August 16, 1996 (the "Rights
Agreement") between CompDent Corporation (the "Company") and State Street Bank
and Trust Company, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to the close of business on August 16, 2006 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one ten-thousandth of a fully paid, non-assessable
share of the Series A Junior Participating Cumulative Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $______ per one
ten-thousandth of a share (the "Exercise Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and
the related Certificate duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the
<PAGE> 52
Exercise Price per share set forth above, are the number and Exercise Price as
of _______________, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person, an Adverse
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Adverse Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person who,
after such transfer, became an Acquiring Person or an Adverse Person, or an
Affiliate or Associate of an Acquiring Person or an Adverse Person, such Rights
shall become null and void 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 Exercise Price and the number
of shares of Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, 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 principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section
11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this
Right Certificate duly marked to indicate that such exercise has occurred as
set forth in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the
2
<PAGE> 53
Board of Directors of the Company at its option may exchange all or any part of
the Rights evidenced by this Certificate for shares of the Company's Common
Stock or Preferred Stock at an exchange ratio (subject to adjustment) of one
share of Common Stock or one ten-thousandth of a share of Preferred Stock per
Right.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $0.01 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one ten-thousandth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts). If the Company elects not to issue such fractional shares, in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock, Common Stock or any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
[Corporate Seal] COMPDENT CORPORATION
Attested:
By:
----------------------------------
Name:
By: Title: [Chairman, Vice Chairman,
---------------------------------- President or Vice President]
[Secretary or Assistant Secretary]
3
<PAGE> 54
Countersigned:
[_____________________________],
as Rights Agent
_______________________________
Authorized Signatory
Date of countersignature:
4
<PAGE> 55
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________ hereby sells,
assigns and transfers unto ____________________ (Please print name and address
of transferee) ____________________________ __________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________, ____
______________________________
Signature
Signature Guaranteed: _____________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ________ are
________ are not being transferred by or on behalf of a Person who is or was an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned ___ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person.
Dated:___________, _____ ______________________________
Signature
5
<PAGE> 56
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
<PAGE> 57
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To COMPDENT CORPORATION:
The undersigned hereby irrevocably elects to exercise ___________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name
of:
Please insert social security
or other identifying taxpayer number: _________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying taxpayer number: _________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: _________________, ____
______________________________
Signature
Signature Guaranteed: _____________________
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<PAGE> 58
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ________ are
________ are not being exercised by or on behalf of a Person who is or was an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned ___ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person.
Dated:___________, ____ ______________________________
Signature
8
<PAGE> 59
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
9
