UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 21, 1996
COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 33-12756-B 04-2841993
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
Community Bancorp, Inc. 17 Pope Street, Hudson, MA 01749
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (508) 568-8321
None
(Former name or former address, if changed since last report)
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Item 5.
Other Events
On May 21, 1996, the Board of Directors of Community Bancorp,
Inc. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock, par value $2.50 per share, of
the Company. The Rights entitle the holder to purchase one
one-thousandth (1/1000th) of a share of Series A Participating
Cumulative Preferred Stock, par value $10.00 per share, of the
Company (the "Preferred Stock"). The description and the terms
of the Rights are further set forth in a Shareholder Rights
Agreement (the "Agreement") between the Company and Cambridge
Trust Company, as Rights' Agent.
Each Right entitles the holder, at any time following the
Distribution Date (described below), to purchase one
one-thousandth (1/1000th) of a share of Preferred Stock at an
Exercise Price of $22.50. The Exercise Price reflects the views
of the Company as to the potential long-term value of the
Company's stock.
Rights become exercisable after the Distribution Date
(described below)
Until the Distribution Date, the Rights are attached to the
common stock and, together with the common stock, are represented
by certificates for the Common Stock. After the Distribution
Date, the Rights detach; separate Rights certificates are issued;
and the Rights trade independently of the Common Stock.
The Distribution Date occurs on the earliest of the
following:
1. The tenth day after the date on which there is a public
announcement that a person ("Acquiring Person"), including
affiliates and associates, has acquired beneficial ownership of
25% or more of the Common Stock of the Company (the date of such
public announcement being referred to as the "Stock Acquisition
Date").
2. The tenth business day after the date of commencement of
a tender offer or exchange offer for Common Stock if, upon
consummation thereof, the offeror would be the beneficial owner
of 25% or more of the Common Stock.
3. Upon a determination by the Board of Directors of the
Company (including a majority of Disinterested Directors, as
defined below) that a person who, along with his affiliates or
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associates, owns 10% or more of the Company's Common Stock
intends to or is likely to cause the Company to repurchase his
shares or to cause pressure on the Company to take action
providing such person with short-term financial gain or is likely
to cause a material adverse impact on the Company (hereafter, an
"Adverse Person"). The Board of Directors, with the concurrence
of a majority of Disinterested Directors, may condition a
determination not to declare a person an Adverse Person on such
conditions as it may select.
Disinterested Directors are Directors who are in office
before the Plan is adopted and who are not officers or employees
of the Company, Acquiring Persons, Adverse Persons, affiliates or
associates or nominees or representatives thereof, as well as
individuals subsequently becoming Directors who are not Acquiring
Persons, Adverse Persons, affiliates or associates or nominees or
representatives thereof and whose nomination is approved by a
majority of Disinterested Directors.
In the event that:
1. Any Person, alone or together with associates and
affiliates, becomes an Acquiring Person, except pursuant to a
tender or exchange offer for all outstanding shares of Common
Stock which the Board of Directors (including a majority of
Disinterested Directors) determines to be at a price which is
fair to the Company's shareholders and otherwise in the best
interests of the Company, its shareholders, employees, customers,
and the communities in which the Company does business, or
2. The Board (including at least a majority of
Disinterested Directors) determines that a person is an Adverse
Person ("Section 11(a)(ii) Events"),
then each of the Rights (other than Rights held by the Acquiring
Person or Adverse Person, associate or affiliate and certain
transferees) becomes a Right to acquire Preferred Stock of the
Company having a value equal to twice the Right's Exercise Price
upon payment of the Exercise Price.
For example: if at the time of the Section 11(a)(ii) Event
the Exercise Price is $100, exercise of a Right after such event
entitles the holder to purchase Preferred Stock of the Company
having a value equal to $200.
If the Company does not have enough authorized Preferred
Stock, the Company is required to substitute value in the form of
cash, or property, or debt or equity securities, or a reduction
of the Exercise Price, or any combination of the
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foregoing, in an aggregate amount equal to the value of the
Preferred Stock which would otherwise be issuable (value for
these purposes being determined after the Section 11(a)(ii)
Event).
If (following the Stock Acquisition Date):
l. The Company is acquired in a merger or other business
combination transaction, except where the transaction is with a
party who acquired shares of Common Stock pursuant to a tender or
exchange offer for all outstanding shares of Common Stock which
the Board of Directors (including a majority of Disinterested
Directors) determines to be at a price which is fair to
shareholders and otherwise in the best interests of the Company,
its shareholders, employees, customers, and the communities in
which the Company does business, and where the price and form of
consideration paid to the remaining holders is the same as in the
tender or exchange offer, or
2. 50% or more of the Company's assets or earning power (on
a consolidated basis) is sold or transferred in one transaction
or a series of related transactions ("Section 13 Events"),
then each Right becomes a Right to acquire Common Stock of the
other party to the transaction having a market value equal to
twice the Exercise Price upon payment of the Exercise Price.
For example: if at the time of the Section 13 Event the
Exercise Price is $100, exercise of a Right after such event
entitles the holder to purchase Common Stock of the acquiror
having a value equal to $200.
Rights are redeemable at a price of $.05 per Right by action
of the Board of Directors until the earliest of:
1. The tenth day after the Stock Acquisition Date,
2. The date on which a Section 11(a)(ii) or Section 13
Event occurs, or
3. 10 years after the record date for distribution of the
Rights. In the event the Company's right of redemption expires
after the occurrence of a Stock Acquisition Date or a
Section 11(a)(ii) Event, but prior to a Section 13 Event, such
right may be reinstated if an Acquiring Person or Adverse Person
reduces his beneficial ownership to less 10% of the Common Stock
(except in a transaction involving the Company or which results
in a Section 11(a)(ii) or Section 13 Event), there are no other
Acquiring or Adverse Persons, and the Board of Directors of the
Company approves.
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The Rights may not be redeemed at any time while there is an
Acquiring Person or Adverse Person or at any time after a change
in the majority of the Directors resulting from a proxy or
consent solicitation by a person who is an Adverse Person or who
has stated an intention to take action resulting in his becoming
an Acquiring Person or in the occurrence of a Section 11(a)(ii)
or Section 13 Event unless there are Disinterested Directors in
office and a majority of such Disinterested Directors approve.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement,
other than those relating to the principal economic terms of the
Rights, may be amended to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the
holders of Rights (excluding the interests of any Acquiring
Person or any Adverse Person, affiliate or associate), or to
shorten or lengthen any time period under the Rights Agreement.
Amendments adjusting time periods may, under certain
circumstances, require the approval of a majority of
Disinterested Directors, or otherwise be limited.
Until a Right is exercised, the holder thereof, as such, has
no rights as a shareholder of the Company, including the right to
vote or to receive dividends.
The Plan and the Rights expire on May 20, 2006.
As of March 31, 1996, there were 3,158,946 shares of Common
Stock issued and outstanding. Each share of Common Stock
outstanding on May 21, 1996 will receive one Right.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the offer on
a substantial number of Rights being acquired. However, the
Rights should not interfere with any merger or other business
combination approved by the Board of Directors.
The Shareholder Rights Agreement between the Company and the
Rights Agent, which specifies the terms of the Rights and
includes as Exhibit A the Terms of Series A Participating
Cumulative Preferred Stock, as Exhibit B the Form of Rights
Certificate, and as Exhibit C the Summary of Rights, is attached
hereto as Exhibit 4 and is incorporated herein by reference. The
foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to Exhibit
4.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Exhibit
4 Shareholder Rights Agreement, dated as of May 24,
1996, between Community Bancorp, Inc. and Cambridge
Trust Company, which includes as Exhibit A the
Terms of Series A Participating Cumulative
Preferred Stock, as Exhibit B the Form of Rights
Certificate, and as Exhibit C the Summary of
Rights, is attached hereto as Exhibit 4 and is
incorporated herein by reference.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
COMMUNITY BANCORP, INC.
(Registrant)
May 31, 1996 By: /s/ James A. Langway
--------------------
Name: James A. Langway
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
4 Shareholder Rights Agreement, dated as 10
of May 24, 1996, between Community
Bancorp, Inc. and Cambridge Trust Company,
which includes as Exhibit A the Terms of
Series A Participating Cumulative
Preferred Stock, as Exhibit B the Form of
Rights Certificate, and as Exhibit C the
Summary of Rights, is attached hereto as
Exhibit 4 and is incorporated herein by
reference.