EXHIBIT 4
Community Bancorp, Inc. Form 8-K
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COMMUNITY BANCORP, INC.
and
CAMBRIDGE TRUST COMPANY
as Rights Agent
SHAREHOLDER RIGHTS AGREEMENT
Dated as of May 24, 1996
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Table of Contents
Section Page
1 Certain Definitions......................... 1
2 Appointment of Rights Agent................. 6
3 Issue of Right Certificates................. 6
4 Form of Right Certificates.................. 8
5 Countersignature and Registration........... 10
6 Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right
Certificates.......................... 10
7 Exercise of Rights; Exercise Price; Expiration
Date of Rights........................ 11
8 Cancellation and Destruction of
Right Certificates.................... 14
9 Reservation and Availability of
Preferred Stock....................... 14
10 Preferred Stock Record Date................. 16
11 Adjustment of Exercise Price, Number and Kind
of Shares or Number of Rights......... 16
12 Certificate of Adjusted Exercise Price or
Number of Shares...................... 27
13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power............ 28
14 Fractional Rights and Fractional Shares..... 31
15 Rights of Action............................ 32
16 Agreement of Right Holders.................. 33
17 Right Certificate Holder Not Deemed
a Shareholder......................... 33
(i)
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Section Page
18 Concerning the Rights Agent................ 34
19 Merger or Consolidation or Change of Name
of Rights Agent...................... 34
20 Duties of Rights Agent..................... 35
21 Change of Rights Agent..................... 38
22 Issuance of New Right Certificates......... 39
23 Redemption and Termination................. 40
24 Notice of Certain Events................... 41
25 Notices.................................... 43
26 Supplements and Amendments................. 43
27 Successors................................. 44
28 Determinations and Actions by the
Board of Directors................... 44
29 Benefits of this Agreement................. 45
30 Severability............................... 45
31 Governing Law.............................. 46
32 Counterparts............................... 46
33 Descriptive Headings....................... 46
Exhibit A -- Certificate of Designation for Preferred Stock
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of Rights
(ii)
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SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of May 24, 1996, between Community
Bancorp, Inc., a Massachusetts corporation (the "Company"), and
(the "Rights Agent").
W I T N E S S E T H
WHEREAS, on May 21, 1996 the Board of Directors of the
Company authorized and declared a dividend distribution of one
Right (as hereinafter defined) for each outstanding share of
Common Stock, par value $2.50 per share, of the Company (the
"Common Stock") outstanding as of the close of business on
May 21, 1996 (the "Record Date"), (other than shares of Common
Stock held in the Company's treasury on 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
Distribution Date (as such term is defined in Section 3 hereof),
each Right initially representing the right to purchase one
one-thousandth (1/1000th) of one share of Series A Participating
Cumulative Preferred Stock, par value $10.00 per share, of the
Company (the "Preferred Stock"), having the powers, rights and
preferences set forth in the Certificate of Designation attached
as Exhibit/A, upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is 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 25%
or more of the shares of Common Stock then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary of the Company
(as such term is hereinafter defined), (iii) any employee benefit
plan of the Company or any Subsidiary of the Company (as such
term is hereinafter defined), (iv) any entity or Person holding
shares of Common Stock organized, appointed or established by the
Company or any Subsidiary for or pursuant to the terms of any
such plan. The Persons described in clauses (i) through (iv)
above are referred to herein as "Exempt Persons."
Notwithstanding the foregoing, no Person
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shall become an "Acquiring Person" as the result of an
acquisition of 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 25% or more of the
Common Stock of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 25% or more
of the 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 of Common Stock of the Company, then such
Person shall be deemed to be an "Acquiring Person."
(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; provided, however, that Dennis
F. Murphy, Jr. shall not be subject to a determination by the
Board of Directors under Section 11(a)(ii)(B) unless and until
Mr. Murphy makes an acquisition of Common Stock that would
increase his ownership to 15.1% or more of the outstanding Common
Stock. Notwithstanding the foregoing, Mr. Murphy shall not
become subject to a determination by the Board of Directors under
Section 11(a)(ii)(B) as a result of an acquisition of Common
Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
officially owned by Mr. Murphy to 15.1% or more of the Common
Stock of the Company then outstanding; provided, however, that if
Mr. Murphy shall become the Beneficial Owner of 15.1% or more of
the Common Stock of the Company then outstanding by reason of
share purchases by the Company and shall, after such purchases by
the Company, become the Beneficial Owner of any additional shares
of Common Stock of the Company, then Mr. Murphy shall be subject
to a determination by the Board of Directors under Section
11(a)(ii)(B).
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations 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:
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(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 General Rules and Regulations under the Exchange Act, as
in effect on the date of this Agreement) or has the right to
dispose of;
(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 after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights (other than these
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 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 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 and (2) is not also then reportable by
such person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in clause (B) of Section
1(d)(ii) hereof) or disposing of any securities of the
Company;
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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 the Beneficial Owner of any securities of the
Company that are beneficially owned by any other director or
officer of the Company solely as a result of his or her position
as 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
Commonwealth of Massachusetts 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., Boston time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Boston
time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value
$2.50 per share, of the Company, except that "Common Stock" when
used with reference to any Person other than the Company shall
mean the capital stock with the greatest voting power, or the
equity securities or other equity interest having power to
control or direct the management, of such Person or, if such
Person is a subsidiary of another Person, the Person which
ultimately controls such first-mentioned Person and which has
issued and outstanding such capital stock, equity securities or
equity interests.
(h) "Disinterested Director" shall mean (i) any member of
the Company's Board of Directors who is not an officer or
employee of the Company or any of its Subsidiaries and is not an
Acquiring Person, an Adverse Person or an Affiliate or Associate
of any such Person or a representative or nominee of an Acquiring
Person, an Adverse Person or any such Affiliate or Associate and
was a member of the Company's Board of Directors prior to the
date of this Agreement, and (ii) any person who subsequently
becomes a member of the Company's Board of Directors who is not
an Acquiring Person, an Adverse Person or an Affiliate or
Associate of any such Person or a representative or nominee of an
Acquiring Person, an Adverse Person or of any such Affiliate or
Associate, if such Person's nomination is recommended or approved
by a majority of the Disinterested Directors.
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(i) "Distribution Date" shall have the meaning defined in
Section 3(a) hereof.
(j) "Exercise Price" shall have the meaning defined in
Section 7(b) hereof.
(k) "Expiration Date" and "Final Expiration Date" shall have
the meanings defined in Section 7(a) hereof.
(l) "Fair Market Value" of any securities or other property
shall be as determined in accordance with Section 11(d) hereof.
(m) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(n) "Preferred Stock" shall mean the Series A Participating
Cumulative Preferred Stock, par value $ 10.00 per share, as set
forth in the introductory paragraph of this Agreement and
described in Exhibit A hereto.
(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)(A) or (B) 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 5:00 p.m. Boston
time on the date of the first public announcement (which, for
purposes of this definition, shall include, without limitation, a
press release or a report filed pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(t) A "Subsidiary" of any Person shall mean any other Person
of which a majority of the voting power of the voting equity
securities or voting interests is owned, directly or indirectly,
by such Person, or which is otherwise controlled by such Person.
(u) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
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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.
Section 3. Issue of Right Certificates
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date, (ii) the close of
business on the tenth Business Day 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 25% or more of the then
outstanding shares of Common Stock, or (iii) upon 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 certificates for the
Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock. As soon
as practicable after the Company has notified the Rights Agent of
the occurrence of the Distribution Date, the Rights Agent will
send, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in
substantially the form of Exhibit B hereto (the "Right
Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. As of
and after the close of business on the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) Not later than ten days after the Record Date, the
Company will send a copy of a Summary of Rights, in substantially
the form attached hereto as Exhibit C (the
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"Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for
the Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock with or without a copy of the
Summary of Rights attached thereto, and the registered holders of
the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the
transfer of any of the certificates for the Common Stock
outstanding on the Record Date, even without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for the Common Stock issued after the
Record Date, but prior to the earlier of the Distribution Date or
the Expiration Date, shall be deemed also to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder Rights
Agreement between Community Bancorp, Inc. and Cambridge Trust
Company, as Rights Agent, dated as of May 24, 1996 (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 Community Bancorp, Inc.
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. Community Bancorp, Inc. 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 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.
With respect to such certificates containing the foregoing
legend, until the earlier of the Distribution Date or the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone, and the transfer of any of such certificates
shall also constitute the transfer of the Rights associated with
the Common Stock represented by such
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certificates. In the event that the Company purchases or
acquires any shares of Common Stock after the Record Date but
prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock which are no longer outstanding.
(d) The Company shall use its best efforts to (i) file, no
later than as soon as practicable following the Distribution Date
indicated in Section 3(a) of this Agreement, a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to 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, and (B) the date of the expiration of the
Rights. 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 registration of the Rights. The Company may temporarily
suspend for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this
Section 3(d), the distribution 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 announcement
at such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the
contrary and unless the Company determines that registration of
the Rights is not necessary based on an exemption under
applicable securities laws or otherwise, the Rights shall not be
distributed pursuant to Section 3(a) of this Agreement unless and
until there is an effective registration statement under federal
securities law with respect to the Rights, nor shall the Rights
be distributed in any jurisdiction unless the requisite
qualification under the blue sky or securities laws of such
jurisdiction shall have been obtained.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment 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
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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 usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof
to purchase such number of one-thousandths (1/1000ths) 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
such Associate or Affiliate) 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 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 or
Section 11 upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence, 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 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 any Associate or Affiliate thereof.
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Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any
Vice President and by its Clerk or any Assistant Clerk, either
manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be
attested by the Clerk or any Assistant Clerk of the Company,
either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless 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 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 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-thousandths (1/1000ths) of a share
of Preferred Stock (or following a Triggering Event, other
securities, cash or other assets as the case may be) as the Right
Certificate or
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Certificates surrendered then entitled such holder to purchase.
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 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
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one-thousandths (1/1000ths) 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 May 20, 2006 (the
"Final Expiration Date") or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the earlier of (i) or
(ii) 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-thousandth (1/1000th) of
a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $22.50, shall be subject to adjustment from
time to time as provided in Section 11 and Section 13(a) 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 payment to the order of the Company, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer
agent therefor) certificates for the number of shares 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 shares 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
- 16-
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, 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.
(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 such
Associate or Affiliate) 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 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
- 17-
its failure to make any determinations with respect to an
Acquiring Person or Adverse Person or any Affiliates and
Associates thereof 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 cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this 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 cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. 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 (and, following the occurrence of a
Triggering Event, other securities or out of its authorized and
issued shares held in its treasury) the number of shares of
Preferred Stock (and, following the occurrence of a Triggering
Event, other securities) that, as provided in this Agreement
including Section 11(d)(iii) hereof, will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) If at the time the Rights become exercisable, the then
outstanding shares of Preferred Stock are quoted on the National
Association of Securities Dealers, Inc. Automated
- 18-
Quotation System ("NASDAQ") or any successor thereto or other
comparable quotation system, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) reserved for
issuance upon such exercise to be quoted on such 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 as of which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with this Agreement, 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 Preferred Stock or other 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, and (B) the date of the expiration of the Rights.
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 set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable unless and until
there is an effective registration statement under federal
securities law with respect to the securities purchasable upon
exercise of the Rights, nor shall the Rights be exercisable in
any jurisdiction unless the requisite qualification under the
blue sky or securities laws of 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 (and, following the occurrence of a Triggering
Event, other securities) delivered upon exercise of 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.
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(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 (or other securities, as the case may
be) upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of 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 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 any of
its capital stock payable in shares of any of its capital
- 20-
stock, (B) subdivide any of its outstanding capital stock,
(C) combine any of its outstanding capital stock into a
smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of any capital 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 Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may
be, which, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Stock (or other
capital stock, as the case may be) 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. 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) In the event
(A) any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person, unless the
event causing the Person to become an Acquiring Person is (x)
a Section 13 Event, or (y) is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on
terms determined by the Board of Directors, including at
least a majority of the Disinterested Directors, to be (1) at
a price which is fair to the Company's shareholders (taking
into account all factors which the directors deem relevant
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (2)
otherwise in the best interests of the Company, its
stockholders, employees, customers and communities in which
the Company does business, or
- 21-
(B) the Board of Directors of the Company shall
declare any Person to be an Adverse Person, upon (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 and (y)
a determination by the Board of Directors, including at least
a majority of the Disinterested Directors, after reasonable
inquiry and investigation, including such consultation 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 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 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 transactions or series or
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; provided, however, that the
Board of Directors of the Company may not declare a Person to
be an Adverse Person if, prior to the time that such Person
acquired 10% or more of the shares of Common Stock then
outstanding, such Person provided to the Board of Directors
in writing a statement of such Person's purpose and
intentions in connection with the proposed acquisition of
Common Stock, together with any other information reasonably
requested of such Person by the Board of Directors, and the
Board of Directors, based on such statement and reasonable
inquiry and investigation, including consultation with such
persons as the directors shall deem appropriate, determines
to notify and notifies such Person in writing that it will
not declare such Person to be an Adverse Person; provided
further, that the Board of Directors, with the concurrence of
at least a majority of the Disinterested Directors, may
expressly condition in any manner a determination not to
declare a Person an Adverse Person on such conditions as the
Board of Directors may select, including without limitation,
such Person's not acquiring more than a specified amount of
stock and/or on on such Person's not taking actions
inconsistent with the purposes and intentions disclosed by
such Person in the statement provided to the Board of
Directors. In the event
- 22-
that the Board of Directors should at any time determine,
upon reasonable inquiry and investigation, including
consultation with such persons as the 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, with the concurrence of at least a majority of
the Disinterested 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, 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 one-thousandths
(1/1000ths) of a share 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-thousandths (1/1000ths)
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 and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Exercise
Price" for each Right and for all purposes of this Agreement) by
50% of the Fair Market Value per share of Common 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) (such number of shares is herein called the "Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject
to the provisions of Section 13 hereof, then only the provisions
of Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that the number of shares of
Preferred Stock which are authorized by the Company's
articles of organization but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Company
shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess is
herein called the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Exercise
Price, (1) cash, (2) a reduction in the Exercise Price, (3)
Preferred Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares,
of capital stock which the Board has
- 23-
deemed to have the same value as shares of Preferred Stock
(such shares or units of shares of capital stock are herein
called "Preferred Stock Equivalents")), (4) debt securities
of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the
Exercise Price, shares of Preferred Stock (to the extent
available) and then, if necessary, cash, which shares or cash
have an aggregate value equal to the Spread. If the Board
shall determine in good faith that it is likely that
sufficient additional shares of Preferred Stock could be
authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization
of such additional shares (such thirty (30) day period, as it
may be extended, is herein called the "Substitution Period").
To the extent that the Company determines that some action
need be taken pursuant to the first or second sentence of
this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek an authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For the
purpose of this Section 11(a)(iii), the value of Preferred
Stock shall be the Fair Market Value per one-thousandth
(1/1000th) of a share of the Preferred Stock on the Section
11(a)(ii) Trigger Date, and the per share or per unit value
of any Preferred Stock Equivalent shall be deemed to equal
the Fair Market Value per one-thousandth (1/1000th) of a
share of the Preferred Stock on such date.
- 24-
(b) If the Company shall fix a record date for the issuance
of rights (other than the 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
rights, privileges and preferences as the shares of Preferred
Stock ("Equivalent Preferred Stock")) or securities convertible
into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or per share of Equivalent Preferred
Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preferred Stock)
less than the 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 (or Equivalent
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 or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid 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 to all holders of Preferred Stock (including any
such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular periodic
cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants
- 25-
(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 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
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 share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the 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 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 for the purpose of computations made pursuant to Section
11(a)(iii) hereof, 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 ten (10) consecutive Trading Days immediately following
such date; and provided further, that in the event that the
Fair Market Value per share of any share of capital stock is
determined during a period following the announcement by the
issuer of such capital stock of (x) a dividend or
distribution on such capital stock payable in shares of such
capital stock or securities convertible into shares of such
capital stock (other than the Rights) or (y) any subdivision,
combination or reclassification of such capital stock, and
prior to the expiration of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, 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
- 26-
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, 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, including,
if at the time of such determination there is an Acquiring
Person or an Adverse Person, a majority of the Disinterested
Directors then in office, or if there are no Disinterested
Directors, 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, including, if at the time of such determination
there is an Acquiring Person or an Adverse Person, a majority
of the Disinterested Directors then in
- 27-
office, or if there are no Disinterested Directors, 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.
(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, including, if at the time of
such determination there is an Acquiring Person or an Adverse
Person, a majority of the Disinterested Directors then in
office, or if there are no Disinterested Directors, 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 ten-thousandth of a share,
as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the
date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any
Right and the Exercise Price thereof 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) through (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
- 28-
evidence the right to purchase, at the adjusted Exercise Price,
the number of shares of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), 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 shares of
Preferred Stock (calculated to the nearest one ten-thousandth)
obtained by (i) multiplying (x) the number of one-thousandths
(1/1000ths) of a share covered by a Right 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
one-thousandths (1/1000ths) of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one-thousandths (1/1000ths) of a
share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one
ten-thousandth) 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
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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-thousandths (1/1000ths) 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 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-thousandths (1/1000ths) 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 shares
of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
number of shares 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
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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, (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 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.
(o) The Company covenants and agrees that after the
Distribution Date it will not, except as permitted by Section 23
or Section 26 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section
11, Section 13 or Section 23(d) 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 Common Stock and the Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall not
be deemed to have knowledge of any such adjustment unless and
until it shall have received such certificate.
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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(o) 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(o) 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 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(o) 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-thousandths (1/1000ths) of a share of
Preferred Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of
one-thousandths (1/1000ths) 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 by the Exercise Price in
effect immediately prior to such first occurrence), and dividing
that product (which, following the first occurrence of a Section
13 Event, shall be referred to as the "Exercise Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the
Fair Market Value (determined pursuant to Section 11(d) hereof)
per
- 32-
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 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)) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to 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 of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such other
Person; and (y) in case such Person is a Subsidiary, directly or
indirectly, or 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.
(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
- 33-
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
(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.
If any Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have
not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in clauses (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who
- 34-
acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock which
complies with the provisions of clause (y) of Section
11(a)(ii)(A) hereof (or a wholly owned subsidiary of any such
Person or Persons), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered
to the remaining holders of shares of Common Stock pursuant to
such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
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 Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the Fair Market
Value of one share of Common Stock. For purposes of this Section
14(b), the Fair Market Value of a share of Common Stock shall be
determined pursuant to Section 11(d) hereof for the Trading Day
immediately prior to the date of such exercise.
(c) The Corporation shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are
one-thousandth (1/1000th) or integral multiples of one
one-thousandth (1/1000th) of a share Preferred Stock) upon
exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions which are one-thousandth (1/1000th) or integral
multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock). Fractional shares of Preferred Stock in
integral multiples of one one-thousandth (1/1000th) of a share
- 35-
of Preferred Stock may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it;
provided that such agreement shall provide that the holders of
such depositary receipts shall have the rights, privileges and
preferences to which they are entitled as beneficial owners of
shares of Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that
are not one-thousandth (1/1000th) or integral multiples of one
one-thousandth (1/1000th) of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same faction of the Fair Market Value
of one share of Preferred Stock. For the purposes of this
Section 14(c), the Fair Marker Value of a Preferred Share shall
be the Fair Market Value of a Preferred Share as determined
pursuant to Section 11(d).
(d) 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
provided in 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 Section 20 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in 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 Rights evidenced by such
Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and 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.
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Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Company and with 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;
(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 Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent 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
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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 24 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 reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and 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.
(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 or 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, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the
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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.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel 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 and 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 be herein specifically
prescribed) may be deemed to be conclusively
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proved and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman of the Board, a
Vice Chairman of the Board, the President, a Vice President, the
Treasurer, any Assistant Treasurer, the Clerk or an Assistant
Clerk of the Company and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Right 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 counter-
signature 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 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 current
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 Preferred Stock
to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of 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,
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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, any Vice Chairman of the Board, the
President, a Vice President, the Clerk, an Assistant Clerk, 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 and/or after which
such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal
included in 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.
(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
- 41-
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, and to each transfer agent of the
Common Stock and the Preferred Stock by registered or certified
mail, and to the holders of the Right Certificates 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 and the 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 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
Commonwealth of Massachusetts or the State of New York (or of any
other state of the United States so long as such
- 42-
corporation is authorized to do business as a banking institution
in the Commonwealth of Massachusetts or the State of New York),
in good standing, which is authorized under such laws to exercise
shareholder services or corporate trust powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 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 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 following the
Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, 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
- 43-
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 $.05 per Right, subject to
adjustments as provided in Section 23(d) hereof (such redemption
price being hereinafter referred to as the "Redemption Price").
The Rights may not be redeemed at any time after the earliest of
5:00 p.m., Boston time, on (i) the tenth day after the Stock
Acquisition Date, (ii) the date on which a Triggering Event
occurs, or (iii) the Final Expiration Date. The Rights may not
be redeemed at any time while there is an Acquiring Person or an
Adverse Person or at any time on or after the date of a change
(resulting from one or more proxy or consent solicitations) in a
majority of the directors in office at the commencement of such
solicitation if any Person who is a participant in such
solicitation is an Adverse Person or has stated (or, if upon the
commencement of such solicitation a majority of the Board of
Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take,
or may consider taking, any action which would result in such
person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event unless there are Disinterested
Directors then in office and redemption of the Rights is
authorized by the Board of Directors, including at least a
majority of the Disinterested Directors. If, following the
occurrence of a Stock Acquisition Date or a Section 11(a)(ii)
Event, and following the expiration of the right of redemption
hereunder, but prior to a Section 13 Event, (1) a Person who is
an Acquiring Person or an Adverse Person shall have transferred
or otherwise disposed of a number of shares of Common Stock in
one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, and
which did not result in the occurrence of a Triggering Event,
such that such Person is thereafter a Beneficial Owner of less
than 10% of the outstanding shares of Common Stock, (2) there are
no other Persons immediately following the occurrence of the
event described in clause (1) who are Acquiring Persons or
Adverse Persons, and (3) the Board of Directors of the Company
shall so approve, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this
Section 23.
- 44-
(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. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23, or in connection with
the purchase, acquisition or redemption of shares of Common Stock
prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the Fair Market Value
of the Common Stock as of the time of redemption) or any other
form of consideration deemed appropriate by the Board.
(d) In the event the Company shall at any time after the
date of this Rights Agreement (i) pay any dividend on Common
Stock in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock into a greater number of shares or (iii)
combine the outstanding shares of Common Stock into a smaller
2umber of shares of the outstanding shares of Common Stock, then
and in each such event the Redemption Price after such event
shall equal the Redemption Price 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 outstanding immediately prior to such event; provided,
however, that in each case such adjustment to the Redemption
Price shall be made only if the amount of the Redemption Price
shall be reduced or increased by $.01 per Right.
Section 24. 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
- 45-
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
Common Stock or Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any
reclassification of its Common Stock or Preferred Stock (other
than a reclassification involving only the subdivision of
outstanding shares of Common Stock or 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(o) hereof), or (v) to
effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 25 hereof, a
notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for determining
holders of the shares of Common Stock or 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 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,
in accordance with Section 25 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.
(c) The Company agrees to give sixty (60) days' notice in
writing to the Rights Agent prior to any event that would cause
the Company's stock to be "qualifying securities" for purposes of
12 C.F.R. 341.2(i).
- 46-
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Community Bancorp, Inc.
l7 Pope Street
Hudson, Massachusetts 01749
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:
Cambridge Trust Company
1336 Massachusetts Avenue
Cambridge, MA 02138
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)
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 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 26, 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. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, 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
(which shortening or lengthening shall be effective only if there
are Disinterested Directors then in office and shall require the
approval of a majority of such Disinterested Directors if (A)
such supplement or amendment occurs at or after the time a Person
becomes an Acquiring Person or an Adverse Person or (B) such
supplement or amendment occurs on or after the date of a change
(resulting
- 47-
from one or more proxy or consent solicitations) in a majority of
the directors then in office at the commencement of such
solicitation if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company
has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider
taking, any action which would result in such Person becoming an
Acquiring Person or an Adverse Person or which would cause the
occurrence of a Triggering Event), 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, an Adverse Person or any Affiliate or
Associate of an Acquiring Person or an Adverse Person);
provided, however, that 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 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. 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 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment
shall be made on or after the Distribution Date which changes the
Redemption Price, the Final Expiration Date, the Exercise Price
or the number of one-thousandths (1/1000ths) of a share of
Preferred Stock for which a Right is exercisable or which affects
any right vested in the Rights Agent. 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.
Section 27. 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 28. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation
of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect
on the date hereof. The Board of Directors of the Company (with,
where specifically provided for
- 48-
herein, the approval of a majority of the Disinterested
Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically
provided for herein, the approval of a majority of the
Disinterested 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 (or, where specifically provided for herein, by the
Disinterested 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 or any of the Disinterested
Directors to any liability to the holders of the Rights or to any
other person.
Section 29. 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) 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).
Section 30. 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
(including, if at the time of such determination, there is an
Acquiring Person or an Adverse Person, a majority of the
Disinterested Directors then in office) 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
- 49-
expire until the close of business on the tenth day following the
date of such determination by the Board of Directors.
Section 31. 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 Commonwealth of Massachusetts
and for all purposes shall be governed by and construed in
accordance with the laws of such Commonwealth applicable to
contracts to be made and to be performed entirely within
Massachusetts.
Section 32. 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 33. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
ATTEST: COMMUNITY BANCORP, INC.
By: /s/ Donald R. Hughes, Jr. By: /s/ James A. Langway
------------------------- --------------------
Clerk Name: James A. Langway
Title: President & Chief
Executive Officer
[Corporate Seal]
ATTEST: CAMBRIDGE TRUST COMPANY
By: /s/ Robert L. DeGregorio By: /s/ James F. Dwinell
------------------------ --------------------
Clerk Name: James F. Dwinell
Title: President
[Corporate Seal]
EXHIBIT A
TERMS OF SERIES A
PARTICIPATING CUMULATIVE
PREFERRED STOCK OF
COMMUNITY BANCORP, INC.
Section 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating
Cumulative Preferred Stock" (the "Series A Preferred Stock"), par
value $10.00 per share. The number of shares initially
constituting the Series A Preferred Stock shall be 3,200;
provided, however, that, if more than a total of 3,200 shares of
Series A Preferred Stock shall be issuable upon the exercise of
Rights (the "Rights") issued pursuant to the Rights Agreement
dated as of May 24, 1996, between the Corporation and
Cambridge Trust Company, as Rights Agent (the "Rights
Agreement"), the Board of Directors of the Corporation, pursuant
to Section 26 of the Business Corporation Law of the Commonwealth
of Massachusetts, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of said Section 26
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 Articles of Organization 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 or Distributions.
(a) Subject to the prior and superior rights of the holders
of shares of any other series of Preferred Stock or other class
of capital stock of the Corporation ranking prior and superior to
the shares of Series A Preferred Stock entitled to receive, when,
as and if declared by the Board of Directors, out of the assets
of the Corporation legally available therefor, (1) quarterly
dividends payable in cash on the last day of each fiscal quarter
in each year, or such other dates as the Board of Directors of
the Corporation shall approve (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of
a share or a fraction of a share of Series A Preferred Stock, in
the amount of $10.00 per whole share (rounded to the nearest
cent) less the amount of all cash dividends declared on the
Series A Preferred Stock pursuant to the following clause (2)
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
- 2-
Preferred Stock (the total of which shall not, in any event, be
less than zero) and (2) dividends payable in cash on the payment
date for each cash dividend declared on the Common Stock in an
amount per whole share (rounded to the nearest cent) equal to the
Formula Number (as hereinafter defined) then in effect times the
cash dividends then to be paid on each share of Common Stock. In
addition, if the Corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or
other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each
such case, the Corporation shall simultaneously pay or make on
each outstanding whole share of Series A Preferred Stock a
dividend or distribution in like kind equal to the Formula Number
then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall
be 1,000; provided, however, that if at any time after May 21,
1996, the Corporation shall (i) declare or pay any dividend on
the Common Stock payable in shares of Common Stock or make any
distribution on the Common Stock in shares of Common Stock,
(ii) subdivide (by a stock split or otherwise) the outstanding
shares of Common Stock into a larger number of shares of Common
Stock or (iii) combine (by a reverse stock split or otherwise)
the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by a
fraction, the numerator of which is the number of shares of
Common Stock that are outstanding after such event and the
denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and provided further, that,
if at any time after May 21, 1996, the Corporation shall issue
any shares of its capital stock in a merger, reclassification, or
change of the outstanding shares of Common Stock, then in each
such event the Formula Number shall be appropriately adjusted to
reflect such merger, reclassification or change so that each
share of Series A Preferred Stock continues to be the economic
equivalent of a Formula Number of shares of Common Stock prior to
such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in Section 2(a)
immediately prior to or at the same time it declares a dividend
or distribution on the Common Stock (other than a dividend or
distribution solely in shares of Common Stock); provided,
however, that, in the event no dividend or distribution (other
than a dividend or distribution in shares of Common Stock) shall
have been declared on the Common Stock
- 3-
during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend
of $l0.00 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared
thereon, which record date shall be the same as the record date
for any corresponding dividend or distribution on the Common
Stock.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the
Quarterly Dividend Payment Date next preceding the date of
original issue of such shares of Series A Preferred Stock;
provided, however, the dividends on such shares which are
originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
a quarterly dividend and on or prior to the next succeeding
Quarterly Dividend Payment Date shall begin to accrue and be
cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A
Preferred Stock which are originally issued prior to the record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend on the
first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next
preceding the date of original issuance of such shares. Accrued
but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(d) So long as any shares of the Series A Preferred Stock
are outstanding, no dividends or other distributions shall be
declared, paid or distributed, or set aside for payment or
distribution on the Common Stock, unless, in each case, the
dividend required by this Section 2 to be declared on the
Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock
shall not be entitled to receive any dividends or other
distributions except as provided herein.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting rights:
- 4-
(a) Each holder of Series A Preferred Stock shall be
entitled to a number of votes equal to the Formula Number then in
effect, for each share of Series A Preferred Stock held of record
on each matter on which holders of the Common Stock or
stockholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common
Stock or stockholders generally then have with respect to such
matter (assuming any holding period or other requirement to vote a
greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable
law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class for the election of directors of the Corporation and on all
other matters submitted to a vote of stockholders of the
Corporation.
(c) If, at the time of any annual meeting of stockholders
for the election of directors, the equivalent of six quarterly
dividends (whether or not consecutive) payable on any share or
shares of Series A Preferred Stock are in default, the number of
directors constituting the Board of Directors of the Corporation
shall be increased by two. In addition to voting together with
the holders of Common Stock for the election of other directors
of the Corporation, the holders of record of the Series A
Preferred Stock voting separately as a class to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of
stockholders (and at each subsequent annual meeting of
stockholders), unless all dividends in arrears have been paid or
declared and set apart for payment prior thereto, to vote for the
election of two directors of the Corporation, the holders of any
Series A Preferred Stock being entitled to cast a number of votes
per share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which
permitted the election of said directors shall cease to exist,
any director who shall have been so elected pursuant to the next
preceding sentence may be removed at any time, either with or
without cause, only by the affirmative vote of the holders of the
shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any
such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by
the vote of such holders. If and when such default shall cease
to exist, the holders of the Series A Preferred Stock shall be
divested of the foregoing special voting rights, subject to
revesting in the event of each and every subsequent like default
in payments of dividends. Upon the termination of the foregoing
special voting rights, the terms of office of all persons who may
have been elected directors pursuant to said special voting
rights
- 5-
shall forthwith terminate, and the number of directors
constituting the Board of Directors shall be reduced by two. The
voting rights granted by this Section 3(c) shall be in addition
to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section ll or by
applicable law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for authorizing or taking any
corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends 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) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A 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
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(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of
stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith with result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (a) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Liquidation Rights. Upon the liquidation,
dissolution or winding up of the Corporation, whether voluntary
or involuntary, no distribution shall be made (l) 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 the
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 (x) $l00.00 per whole share or (y) an
aggregate amount per share equal to the Formula Number then in
effect times the aggregate amount to be distributed per share to
holders of Common Stock or (2) 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).
Section 6. 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 or any other property, then in any such case the
outstanding shares of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share
equal to the Formula Number then in effect times the aggregate
amount of stock, securities, cash or any other property (payable
in kind), as the case may be, into which or
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for which each share of Common Stock is exchanged or changed. In
the event both this Section 6 and Section 2 appear to apply to a
transaction, this Section 6 will control.
Section 7. No Redemption; No Sinking Fund.
(a) The shares of Series A Preferred Stock shall not be
subject to redemption by the Corporation or at the option of any
holder of Series A Preferred Stock; provided, however, that the
Corporation may purchase or otherwise acquire outstanding shares
of Series A Preferred Stock in the open market or by offer to any
holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or
sinking fund.
Section 8. Ranking. The Series A Preferred Stock shall
rank junior to all other series of Preferred Stock of the
Corporation, unless the Board of Directors shall specifically
determine otherwise in fixing the powers, preferences and
relative, participating, optional and other special rights of the
shares of such series and the qualifications, limitations and
restrictions thereof.
Section 9. Fractional Shares. The Series A Preferred Stock
shall be issuable upon exercise of the Rights issued pursuant to
the Rights Agreement in whole shares or in any fraction of a
share that is one one-thousandth (l/l000th) of a share or any
integral multiple of such fraction which shall entitle the
holder, in proportion to such holder's fractional shares, to
receive dividends, exercise voting rights, 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, prior to the first issuance of a share
or a fraction of a share of Series A Preferred Stock, may elect
(l) to make a cash payment as provided in the Rights Agreement
for fractions of a share other than one one-thousandth (l/l000th)
of a share or any integral multiple thereof or (2) to issue
depositary receipts evidencing such authorized fraction of a
share of Series A Preferred Stock pursuant to an appropriate
agreement between the Corporation and a depositary selected by
the Corporation; provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
holders of the Series A Preferred Stock.
- 8-
Section l0. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retire and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock, without designation as to
series until such shares are once more designated as part of a
particular series by the Board of Directors pursuant to the
provisions of Section 2 of Article IV of the Articles or
Organization.
Section ll. Amendment. None of the powers, preferences and
relative, participating, optional and other special rights of the
Series A Preferred Stock as provided herein or in the Certificate
of Incorporation shall be amended in any manner which would alter
or change the powers, preferences, rights or privileges of the
holders of Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least
66-2/3% of the outstanding shares of Series A Preferred Stock,
voting as a separate class; provided, however, that no such
amendment approved by the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers, preferences, rights or privileges of any
holder of shares of Series A Preferred Stock originally issued
upon exercise of the Rights after the time of such approval
without the approval of such holder.
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER MAY 20, 2006 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT THE OPTION OF THE COMPANY AT $.05 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
COMMUNITY BANCORP, INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement
dated as of May 24, 1996 (the "Rights Agreement"), between
COMMUNITY BANCORP, INC., a Massachusetts corporation (the
"Company"), and CAMBRIDGE TRUST COMPANY (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to
5:00 P.M. (Boston time) on May 20, 2006 at the principal office
of the Rights Agent, or its successor as Rights Agent, one
one-thousandth (1/1000th) of a fully paid and non-assessable
share of the Preferred Stock, par value $10.00 per share
("Preferred Stock"), of the Company, at a purchase price of
$22.50 per share (the "Exercise Price") upon presentation and
surrender of this Rights Certificate with the Form of Election to
Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of1shares which may be
purchased upon exercise thereof) set forth above, and the
Exercise Price per share set forth above, are the number and
Exercise Price as of , 1996.
As provided in the Rights Agreement, the Purchase Price and
the number of shares of Preferred Stock which may be purchased
upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the
happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file
at the above-mentioned office of the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
shares of Preferred Stock as the Rights evidenced by the Rights
Certificate of Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.05 per Right.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of Preferred Stock or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withholder
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
Rights Certificate shall have been exercised as provided in the
Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ,
1996.
ATTEST:
COMMUNITY BANCORP, INC.
By: By:
Clerk Title:
[Corporate Seal]
COUNTERSIGNED:
CAMBRIDGE TRUST COMPANY
By:
Title:
A COPY OF THE RIGHTS AGREEMENT SETTING FORTH IN FULL THE RIGHTS
OF THE HOLDER HEREOF AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH RIGHTS MAY BE OBTAINED WITHOUT CHARGE FROM
THE RIGHTS AGENT, 1336 MASSACHUSETTS AVENUE, CAMBRIDGE,
MASSACHUSETTS 02138.
- 4-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within rights
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: , 199
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
- 5-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the
Rights Certificate.)
The undersigned hereby irrevocably elects to exercise
Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock issuable
upon the exercise of such Rights and requests that certificates
for such shares to issued in the name of:
(Please insert social security
or other identifying number)
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the
remaining balance of such Rights shall be registered in the name
of and delivered to:
(Please insert social security
or other identifying number)
(Please print name and address)
I certify under penalty of perjury that the social security
and other identifying numbers indicated above are correct.
Dated: , 19
Signature
(Signature must conform in all
respects to name of holder as
specified on the fact of this
Rights Certificate)
Signature Guaranteed:
EXHIBIT C
COMMUNITY BANCORP, INC.
SHAREHOLDER RIGHTS AGREEMENT
SUMMARY OF RIGHTS
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.
Share Purchase Rights: 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.
Exercisability: Rights become exercisable after the
Distribution Date (described below)
Transferability: 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.
Distribution Date: 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-
(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 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.
Flip-In Events: 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)
- 3-
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 ("Flip-In 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
Flip-In 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
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
Flip-In Event).
Flip-Over Events: 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
- 4-
(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 ("Flip-Over 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
Flip-Over 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.
Redemption: 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 Flip-In or
Flip-Over 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 Flip-In Event, but
prior to a Flip-Over 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
- 5-
in a Flip-In or Flip-Over Event), there
are no other Acquiring or Adverse
Persons, and the Board of Directors of
the Company approves.
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 Flip-In or Flip-Over
Event unless there are Disinterested
Directors in office and a majority of
such Disinterested Directors approve.
Amendment: 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.
Voting and Dividend
Rights: 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.
Expiration: The Plan and the Rights expire on May 20,
2006.