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SYNERGY FINANCIAL GROUP, INC.
and
REGISTRAR AND TRANSFER COMPANY,
Rights Agent
RIGHTS AGREEMENT
Dated as of November 23, 2004
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TABLE OF CONTENTS
Page
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Section 1 Certain Definitions...................................................... 1
Section 2. Appointment of Rights Agent ............................................. 6
Section 3. Issuance of Rights Certificates.......................................... 6
Section 4. Form of Rights Certificates.............................................. 8
Section 5. Countersignature and Registration........................................ 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............ 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............ 10
Section 8. Cancellation and Destruction of Rights Certificates...................... 12
Section 9. Reservation and Availability of Capital Stock............................ 13
Section 10. Record Date for Securities Issued Upon Exercise.......................... 14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights ................................................... 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............... 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power....................................................... 22
Section 14. Fractional Rights and Fractional Shares.................................. 24
Section 15. Rights of Action......................................................... 25
Section 16. Agreement of Rights Holders.............................................. 26
Section 17. Rights Certificate Holder Not Deemed a Stockholder....................... 26
Section 18. Concerning the Rights Agent.............................................. 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent ............... 27
Section 20. Duties of Rights Agent................................................... 28
Section 21. Change of Rights Agent................................................... 30
Section 22. Issuance of New Rights Certificates...................................... 31
Section 23. Redemption and Termination............................................... 31
Section 24. Exchange................................................................. 32
Section 25. Notice of Certain Events................................................. 33
Section 26. Notices.................................................................. 34
Section 27. Supplements and Amendments............................................... 34
Section 28. Successors............................................................... 35
Section 29. Determinations and Actions by the Board, etc. ........................... 35
Section 30. Benefits of this Agreement............................................... 35
Section 31. Severability............................................................. 35
Section 32. Governing Law ........................................................... 35
Section 33. Counterparts............................................................. 36
Section 34. Descriptive Headings..................................................... 36
Exhibit A -- Form of Rights Certificate
Exhibit B -- Summary of Rights
RIGHTS AGREEMENT
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RIGHTS AGREEMENT, dated as of November 23, 2004, between Synergy
Financial Group, Inc., a New Jersey corporation (the "Company"), and Registrar
and Transfer Company, a New Jersey corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 23, 2004, (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and
declared a dividend distribution of one Right (as hereinafter defined) for each
share of Common Stock (as hereinafter defined) of the Company outstanding at the
close of business on December 6, 2004 (the "Record Date") and authorized the
issuance of one Right (as such number may hereafter be adjusted pursuant to the
provisions of Section 11(i) hereof) for each share of Common Stock of the
Company issued between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date (as hereinafter defined)
and under certain circumstances thereafter, each Right initially representing
the right to purchase one share of Common Stock of the Company, upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates and Associates (as
hereinafter defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall not include
(i) the Company,
(ii) any Subsidiary of the Company,
(iii)any employee benefit plan or employee stock plan of
the Company or of any Subsidiary of the Company,
(iv) any Person or entity organized, appointed, established
or holding Common Stock of the Company by, for or
pursuant to the terms of any employee benefit plan or
employee stock plan,
(v) a Person who, together with its Affiliates and
Associates, becomes the Beneficial Owner of 15% or more
of the shares of Common Stock of the Company then
outstanding solely as a result of a reduction in the
number of shares of Common Stock of the Company
outstanding due to the repurchase of shares of Common
Stock of the Company by the Company, unless and until
such
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time as such Person shall purchase or otherwise become
(as a result of actions taken by such Person or its
Affiliates or Associates) the Beneficial Owner of
additional shares of Common Stock of the Company
constituting 1% or more of the then outstanding shares
of Common Stock of the Company.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act (as hereinafter defined).
(e) "Agreement" shall mean this Rights Agreement as originally
executed or as it may from time to time be supplemented, amended, renewed,
restated or extended pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, owns or has the right
to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants, options or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event (as hereinafter defined), or (C)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights are Original Rights (as
hereinafter defined) or securities issued pursuant to Section 11(a)(i)
hereof in connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding (whether or not in
writing) to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy or consent
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
also then
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reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor statement); 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 (A) of the proviso
to subparagraph (ii) of this paragraph (f)) or disposing of any voting
securities of the Company; provided, however, that nothing in this
paragraph (f) shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to be
deemed to "beneficially own," any securities acquired, or which that
Person has the right to acquire, through such Person's participation in
good faith in a firm commitment underwriting until the expiration of 40
days after the date of such acquisition, and then only if such
securities continue to be owned by such Person at the expiration of 40
days.
(g) "Board" shall have the meaning set forth in the preamble
of this Agreement.
(h) "Business Day" shall mean any day other than a Saturday,
Sunday or day on which banking institutions in the Commonwealth of Pennsylvania
are authorized or obligated by law or executive order to close.
(i) "Close of Business" on any given date shall mean 5:00
P.M., Eastern time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
(j) "Common Stock" when used in reference to the Company shall
mean the common stock, par value $0.10 per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean
(i) the capital stock or other equity interest in
such Person with the greatest voting power,
(ii) the equity securities or other equity interest
having power to control or direct the management of such Person or
(iii) if such Person is a Subsidiary (as hereinafter
defined) of another Person, the capital stock, equity securities of or
other equity interest in the Person or Persons which ultimately control
such first-mentioned Person and which has issued any such outstanding
capital stock, equity securities or equity interest. "Common Stock"
when used with reference to any Person not organized in corporate form
shall mean units of beneficial interest which (x) represent the right
to participate generally in the profits and losses of such Person
(including without limitation any flow-through tax benefits resulting
from an ownership interest in such Person) and (y) are entitled to
exercise the greatest voting power of such Person or, in the case of a
limited partnership, have the power to remove the general partner or
partners.
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(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(l) "Company" shall have the meaning set forth in the first
paragraph of this Agreement until a successor corporation or entity shall have
become such or until a Principal Party (as hereinafter defined) shall assume,
and thereafter be liable for, all obligations and duties of the Company
hereunder pursuant to the applicable provisions of this Agreement, and
thereafter, "Company" shall mean such successor or Principal Party,
respectively.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(o) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(p) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(q) "Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof.
(r) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Final Expiration Date" shall mean the Close of Business
on December 6, 2014.
(t) "Original Rights" shall mean Rights acquired by a Person
or such Person's Affiliates or Associates prior to the Distribution Date or
issued pursuant to Section 3(a) or Section 22 hereof.
(u) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity and includes without limitation an
unincorporated group of persons who, by formal or informal agreement or
arrangement (whether or not in writing), have embarked on a common purpose or
act.
(v) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(w) "Purchase Price" shall have the meaning set forth in
Section 4(b) hereof.
(x) "Record Date" shall have the meaning set forth in the
preamble of this Agreement.
(y) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
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(z) "Rights" shall have the meaning set forth in the preamble
of this Agreement.
(aa) "Rights Agent" shall mean the Person named as the "Rights
Agent" in the preamble of this Agreement until a successor Rights Agent shall
have become such pursuant to the applicable provisions hereof, and thereafter
"Rights Agent" shall mean such successor Rights Agent. If at any time there is
more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
(bb) "Rights Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(cc) "Rights Dividend Declaration Date" shall have the meaning
set forth in the preamble of this Agreement.
(dd)"Section 11(a)(ii) Event" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(ee) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(ff) "Section 13 Event" shall have the meaning set forth in
Clauses (x), (y) or (z) of Section 13(a) hereof.
(gg) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(hh) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(ii) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions of such corporation or
other entity are at the time directly or indirectly beneficially owned or
otherwise controlled by such Person and any Affiliate or Associate of such
Person.
(jj) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(kk) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ll) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
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(mm) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock of the Company) 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, upon ten days' prior written notice to the Rights Agent.
The Rights Agent shall have no duty to supervise, and in no event shall be
liable for, the acts or omissions of any such Co-Rights Agent. In the event that
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,
and any actions which may be taken by the Rights Agent pursuant to the terms of
this Agreement may be taken by any such Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
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(a) Until the earlier of (i) the Close of Business on the
tenth Business Day (or such specified or unspecified later date as may be
determined by the Board before the occurrence of a Distribution Date) after the
Stock Acquisition Date (or, if the tenth Business Day (or such later date) after
the Stock Acquisition Date occurs before the Record Date, the Close of Business
on the Record Date) or (ii) the Close of Business on the tenth Business Day (or
such specified or unspecified later date as may be determined by the Board
before the occurrence of a Distribution Date) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company, or any Person entity
organized by the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon consummation thereof, such
Person would become an Acquiring Person (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraphs (b) and (c) of this Section 3) by the
certificates for the Common Stock of the Company registered in the names of the
holders thereof (which certificates shall be deemed also to be certificates for
Rights) and not by separate certificates and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of Common Stock of
the Company (including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send by first-class, insured,
postage-prepaid mail, to each record holder of the Common Stock of the Company
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more rights certificates,
substantially in the form attached hereto as Exhibit A (the "Rights
Certificates"), evidencing one Right for each share of Common Stock of the
Company so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock of the Company has
been made pursuant to Section 11(i) hereof, at the time of distribution of the
Rights Certificates, the Company shall not be required to issue Rights
Certificates evidencing fractional Rights, but may, in lieu thereof, make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and
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cash is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock of the Company who may
so request from time to time prior to the Expiration Date. With respect to
certificates for the Common Stock of the Company outstanding as of the Record
Date, or issued subsequent to the Record Date, until the earlier of the
Distribution Date or the Expiration Date, the Rights will be evidenced by such
certificates for the Common Stock of the Company with or without a copy of the
Summary of Rights attached and the registered holders of the Common Stock of the
Company shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock of the Company in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock of the Company.
(c) Rights shall be issued in respect of all shares of Common
Stock of the Company which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date and, to the extent provided in Section
22 hereof, in respect of shares of Common Stock of the Company issued after the
Distribution Date and prior to the Expiration Date. Certificates representing
such shares of Common Stock of the Company shall also be deemed to be
certificates for Rights, and shall, to the extent reasonably practicable
following the Record Date, bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Synergy Financial Group, Inc. (the "Company") and Registrar
and Transfer Company (the "Rights Agent") dated as of November
23, 2004, as the same may be amended, restated, renewed or
extended from time to time (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge, promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights beneficially owned (as
such term is defined in the Rights Agreement) by any Person
who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
The Rights shall not be exercisable, and shall be void so long
as held, by a holder in any
7
jurisdiction where the requisite qualification to the issuance
to such holder, or the exercise by such holder, of the Rights
in such jurisdiction shall not have been obtained or be
obtainable.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock of the Company represented by such certificates
shall be evidenced by such certificates alone, and registered holders of Common
Stock of the Company shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificates.
Section 4. Form of Rights Certificates.
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(a) The Rights Certificates (and the forms of election to
purchase, assignment and certificate contained therein to be printed on the
reverse thereof) shall each be substantially in the form attached hereto as
Exhibit A and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of shares
of Common Stock of the Company as shall be set forth therein at the exercise
price set forth therein (such exercise price per share of Common Stock of the
Company, as adjusted from time to time hereunder, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(a)(i) or Section 22 hereof that represents Rights beneficially owned
by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board, in its sole discretion, has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of the provisions of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
8
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by an
authorized signatory of the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by an authorized signatory of the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by an authorized signatory of the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
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Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
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(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may be transferred, split
up, combined or exchanged for another Rights Certificate or Rights Certificates
entitling the registered holder to purchase a like number of shares of Common
Stock of the Company (or, following the occurrence of a Triggering Event, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Rights Certificates surrendered then entitled such holder (or former holder
in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged, with the forms of assignment and
certificate contained therein duly executed, at the principal
9
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate or
Rights Certificates until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate or Rights Certificates 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 Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment from the holder of a Rights
Certificate of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a valid Rights Certificate and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Subject to Section 7(e) hereof, at any time after the
Distribution Date, the registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein, including
without limitation, the restrictions on exercisability set forth in Section
9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate contained therein duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of shares of Common Stock of the Company (or, following the occurrence of
a Triggering Event, other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior to the
earliest of (i) the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, or (iii) the time at which the Rights
are exchanged as provided in Section 24 hereof (the earliest of (i), (ii) and
(iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common Stock of the
Company pursuant to the exercise of a Right shall initially be $40, shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
contained therein duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price, as such amount may
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be reduced pursuant to Section 11(a)(iii) hereof, for each share of Common Stock
of the Company (or, following a Triggering Event, for other securities, cash or
other assets, as the case may be) to be purchased (as set forth below) and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to
Sections 7(f) and 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock of the Company (or make available,
if the Rights Agent is the transfer agent for such shares) certificates for the
total number of shares of Common Stock of the Company 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 Common Stock of the Company issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Common Stock of the
Company as are to be purchased (in which case certificates for the shares of
Common Stock of the Company represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to, or upon the order of, the registered holder of
such Rights Certificate. The payment of the Purchase Price (as such amount may
be reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by
certified check, cashier's check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue other securities,
pay cash or distribute other property pursuant to this Section 7(c) or 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. In the event that, immediately prior to
the occurrence of a Distribution Date, the number of shares of Common Stock of
the Company which are authorized by the Company's restated articles of
incorporation, as amended and in effect at such time, but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit exercise in full of the Rights in accordance with their
terms, the Company, acting by resolution of the Board, shall follow the same
procedures and may take any of the same actions in connection with the exercise
of Rights under this Section 7(c) as are required or permitted to be followed or
taken pursuant to Section 11(a)(iii) hereof with respect to substitution of
value in connection with the exercise of Rights under Section 11(a)(ii) hereof.
The Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Common Stock of the Company would be
issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an
11
Acquiring Person, or an Affiliate or Associate of an Acquiring Person which the
Board, in its sole discretion, determines is or was involved in or caused or
facilitated, directly or indirectly (including through any change in the Board),
such Section 11(a)(ii) Event, (ii) a transferee of any such Acquiring Person (or
of any such Affiliate or Associate) who becomes a transferee after such
Acquiring Person becomes such or (iii) a transferee of any such Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from such
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or any of their Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Rights
Certificate upon the occurrence of any purported assignment or exercise as set
forth in this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
----------------------------------------------
Certificates. All Rights Certificates surrendered for the purpose of exercise,
- ------------
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates and, in such case, shall deliver a certificate of destruction
thereof to the Company.
12
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) The Company covenants and agrees that, from and after the
Distribution Date, it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock of the Company (and, following
the occurrence of a Triggering Event, other securities) or out of its authorized
and issued shares of Common Stock of the Company held in its treasury, the
number of shares of Common Stock of the Company (and, following the occurrence
of a Triggering Event, the amount of other securities) that, as provided in this
Agreement (including Section 11(a)(iii) hereof), will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock of the Company (and,
following the occurrence of a Triggering Event, other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use all reasonable efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use all reasonable efforts to (i) file,
as soon as practicable following the earliest date after the first occurrence of
a Triggering Event in 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 Act on an appropriate form with
respect to the Common Stock or other securities purchasable upon exercise of the
Rights, (ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states and other jurisdictions
in connection with the exercisability of the Rights. The Company may, acting by
resolution of the Board, temporarily suspend, for a period of time not to exceed
90 days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
public announcement at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement is
required in other circumstances following the Distribution Date, the Company may
similarly temporarily suspend the exercisability of the Rights until such time
as a registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, or the exercise thereof shall not otherwise be permitted
under applicable law or a registration statement shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common Stock of the
Company (and, following the
13
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 Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that, except as
set forth in Section 6(a) hereof and this Section 9(e), it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of shares of Common Stock of the Company (or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of shares of Common Stock of the
Company (or other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates for a number of shares of Common Stock of the Company (or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Record Date for Securities Issued Upon Exercise. Each
---------------------------------------------------
Person in whose name any certificate for a number of shares of Common Stock of
the Company (or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such shares of Common Stock of the Company (or other securities, as
the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the transfer books for the Common Stock (or other
securities, as the case may be) of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the transfer books for the Common Stock (or other securities, as the case
may be) of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate, as such, shall not be entitled to
any rights of a stockholder of the Company (or the Principal Party) 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 (or the Principal Party), except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
-----------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of shares, or
- -----------------
fractions thereof, purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the outstanding shares
of Common Stock of the Company
14
payable in shares of Common Stock of the Company, (B) subdivide or
split the outstanding shares of Common Stock of the Company, (C)
combine or consolidate the outstanding shares of Common Stock of the
Company into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Common Stock of the Company
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of
such subdivision, split, combination, consolidation or
reclassification, and the number and kind of shares of Common 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, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Common Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date, whether or
not such Right was then exercisable, and at a time when the transfer
books for the Common Stock (or other capital stock, as the case may
be) of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, split, combination, consolidation or reclassification. If
an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that
any Person, alone or together with its Affiliates and Associates,
shall, at any time after the Rights Dividend Declaration Date, become
an Acquiring Person, unless the event causing such person to become an
Acquiring Person is a transaction set forth in Section 13(a) hereof,
then promptly after the date of occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of shares of Common Stock of the Company for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event (whether or not such Right was then
exercisable) and (y) dividing that product (which following such first
occurrence, shall thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by 50% of the
Current Market Price per share of Common Stock of the Company on the
date of such first occurrence (such number of shares being referred to
as the "Adjustment Shares").
(iii) In lieu of issuing any shares of Common Stock
of the Company in accordance with Section 11(a)(ii) hereof, the
Company, acting by resolution of the Board, may, and in the event that
the number of shares of Common Stock of the Company which are
authorized by the Company's restated articles of incorporation 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 the foregoing subparagraph
15
(ii) of this Section 11(a), the Company, acting by resolution of the
Board, 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 Purchase Price attributable to each Right (such
excess being referred to as the "Spread") and (B) with respect to all
or a portion of each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) equity securities of the Company other than
Common Stock of the Company (such equity securities being referred to
as "Common Stock Equivalents")), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing which, when
added to any shares of Common Stock of the Company issued upon such
exercise, has 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, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above
within 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) hereof, as such date may be
extended pursuant to Section 23(a) hereof or amended pursuant to
Section 27 hereof, expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of
Common Stock of the Company (to the extent available) and then, if
necessary, cash, which shares and 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 Common Stock of the
Company could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the
extent necessary, but not more than 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 period,
as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the
first and/or second sentences 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 any 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 and a public announcement at such time
as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock of the Company shall be the
Current Market Price per share of the Common Stock of the Company on
the Section 11(a)(ii) Trigger Date, and the value of any Common Stock
Equivalent shall be deemed to be equal to the value of the Common
Stock of the Company on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock of the
Company entitling them to subscribe for or purchase (for a period expiring
within 45 calendar days after such record date) Common
16
Stock of the Company or securities convertible into Common Stock of the Company
or Common Stock Equivalents at a price per share of Common Stock of the Company
or per share of Common Stock Equivalents (or having a conversion price per
share, if a security convertible into Common Stock of the Company or Common
Stock Equivalents) less than the Current Market Price per share of Common Stock
of the Company on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the sum of (i) the number of shares of Common Stock of the Company or
Common Stock Equivalents outstanding on such record date, (ii) the number of
shares of Common Stock of the Company or Common Stock Equivalents underlying
securities outstanding on such record date which are convertible into Common
Stock of the Company or Common Stock Equivalents and (iii) the number of shares
of Common Stock of the Company which the aggregate subscription price of the
total number of shares of Common Stock of the Company or Common Stock
Equivalents so to be offered (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the sum of (i) the number of shares
of Common Stock of the Company outstanding on such record date, (ii) the number
of shares of Common Stock of the Company or Common Stock Equivalents underlying
securities outstanding on such record date which are convertible into Common
Stock of the Company or Common Stock Equivalents and (iii) the number of
additional shares of Common Stock of the Company or Common Stock Equivalents to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration, part or all of
which may be in a form other than cash, the value of such consideration shall be
as determined in good faith by the Board, which determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. Shares of Common Stock of the Company owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock of the Company (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular, periodic cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Common Stock of the Company, but including any dividend payable in
stock other than Common Stock of the Company) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Common Stock
of the Company on such record date, less the fair market value (as determined in
good faith by the Board, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Common Stock of
the Company and the denominator of which shall be such Current Market Price per
share of Common
17
Stock of the Company. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the Current Market
Price per share of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the 10 consecutive
Trading Days immediately following such date; provided, however, that in the
event that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights) or (B) any subdivision, combination, consolidation, reverse
stock split or reclassification of such Common Stock, and prior to the
expiration of the requisite 30-Trading Day or 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, consolidation, reverse stock
split or reclassification, then, and in each such case, the Current Market Price
shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system or as quoted by the Nasdaq
National Market with respect to securities listed or admitted to trading on
another national securities exchange or quoted by the Nasdaq National Market,
respectively or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange or quoted by the Nasdaq National
Market, the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by The Nasdaq
Stock Market or such other quotation system then in use or, if on any such date
the shares of Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If on any such date
the Common Stock is not publicly held or not so listed, admitted to trading or
quoted, and no market maker is making a market in such Common Stock, Current
Market Price shall mean the fair value of such shares on such date as determined
in good faith by the Board, which determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
a Business Day.
18
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease in the Purchase Price of at least one percent;
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 one cent or to the nearest one-thousandth of a share of Common
Stock of the Company 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 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 Common
Stock of the Company, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof (or the number of
Rights) shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock of the Company contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k), (l) and (m) hereof, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Common Stock of the Company shall apply on
like terms to any such other shares; provided, however, that the Company shall
not be liable for its inability to reserve and keep available for issuance upon
exercise of the Rights pursuant to Section 11(a)(ii) hereof a number of shares
of Common Stock of the Company greater than the number then authorized by the
Company's restated articles of incorporation, but not outstanding or reserved
for any other purpose.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
of the Company purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock of the Company (calculated to the nearest one-thousandth
of a share of Common Stock) obtained by (i) multiplying (x) the number of shares
of Common Stock of the Company covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock of the Company 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 shares
of Common Stock of the Company for which a Right was exercisable immediately
prior
19
to such adjustment. Each Right held of record prior to such adjustment of that
number of Rights shall become the number of Rights (calculated to the nearest
one-thousandth of a Right) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock of the Company issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share of Common Stock of
the Company and the number of shares Common Stock of the Company which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any, of the
number of shares of Common Stock of the Company 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, such number of shares of Common Stock of
the Company at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the number of shares of Common Stock of the Company or other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of shares of Common Stock of the Company or other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
20
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such adjustments in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Common Stock of the Company, (ii) issuance wholly for cash of any shares of
Common Stock of the Company at less than the Current Market Price, (iii)
issuance wholly for cash of shares of Common Stock of the Company or securities
which by their terms are convertible into or exchangeable for shares of Common
Stock of the Company, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof) or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof) if (x) at the time of or immediately after
such consolidation, merger, sale or transfer there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale or transfer, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock of the Company, a copy of such certificate and (c) mail a brief
summary thereof to each record holder of a Rights Certificate (or, if prior to
the Distribution Date, to each record holder of a certificate representing
shares of Common Stock of the Company) in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to prepare
such certificate or statement or make such filings or mailings shall not affect
the validity of, or the force or effect of, the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment
21
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
----------------------------------------------------------
Flow or Earning Power.
- ----------------------
(a) In the event (a "Section 13 Event") that, on or after the
Stock Acquisition Date, directly or indirectly, (x) the Company shall
consolidate or otherwise combine with, or merge with or into, any other Person
or Persons (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving corporation of such consolidation, combination or merger, (y) any
Person or Persons (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate or otherwise combine with,
or merge with or into, the Company and the Company shall be the continuing or
surviving corporation of such consolidation, combination or merger and, in
connection with such consolidation, combination or merger, all or part of the
outstanding shares of Common Stock of the Company shall be changed into or
exchanged for stock or other securities of any other Person or Persons or cash
or any other property or (z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole and calculated on the basis of
the Company's most recent regularly prepared financial statements) to any Person
or Persons (other than the Company or any Subsidiary of the Company in one or
more transactions each of which complies with Section 11(o) hereof); provided,
however, that this clause (z) of Section 13(a) hereof shall not apply to the pro
rata distribution by the Company of assets (including securities) of the Company
or any of its Subsidiaries to all holders of Common Stock of the Company; then,
and in each such case (except as may be contemplated by Section 13(d) hereof),
proper provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall, on or after the later of (A) the date of
the first occurrence of any such Section 13 Event or (B) the date of the
expiration of the period within which the Rights may be redeemed pursuant to
Section 23 hereof (as the same may be extended pursuant to Section 23(a) hereof
or amended pursuant to Section 27 hereof), thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of shares of Common Stock of the
Company for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such shares of Common Stock of the Company for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and (2)
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such Section
13 Event; (ii) the shares of Common Stock of such Principal Party received by
each holder of a Right upon
22
exercise of that Right shall be fully paid and nonassessable; (iii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iv) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (v) such Principal Party shall take such steps
(including without limitation the reservation of a sufficient number of shares
of its Common Stock) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and (vi) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a) hereof, (A)
the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted, changed or exchanged in such
merger, consolidation or combination (or, if there is more than one
such issuer, the issuer the Common Stock of which has the greatest
market value) or (B) if no securities are so issued, the Person that is
the other party to such merger (and survives the merger), consolidation
or combination (or, if there is more than one such Person, the Person
the Common Stock of which has the greatest market value), or if the
other party to the merger does not survive the merger, the Person that
does survive the merger (including the Company, if it survives); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a) hereof, the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions
or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the
issuer of Common Stock having the greatest market value; provided,
however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
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; (2) if the Common Stock of such
Person is not and has not been so registered and such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value;
and (3) if the Common Stock of such Person is not and has not been so
registered and such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2)
above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party
23
were a Subsidiary of both or all of such joint venturers, and the
Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement confirming that the
requirements of Section 13(a) and Section 13(b) hereof shall promptly be
performed in accordance with their terms and that such Section 13 Event shall
not result in a default by the Principal Party under this Agreement as the same
shall have been assumed by the Principal Party pursuant to Section 13(a) and
Section 13(b) hereof and further providing that, as soon as practicable after
the date of any such Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and to similarly comply with applicable state
securities laws;
(ii) use its best efforts to list or obtain quotation
of (or continue the listing or quotation of) the Rights and the
securities purchasable upon exercise of the Rights on a national
securities exchange or by an automated quotation service;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange Act; and
(iv) use its best efforts to obtain waivers of any
rights of first refusal or preemptive rights in respect of the shares
of Common Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, combinations or sales or other transfers. In
the event that a Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section
13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(a)(i)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of any such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional
24
Rights would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Right. For purposes of this Section
14(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the
Rights for any Trading Day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other quotation system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
shall be used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock of the Company upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock of the
Company. In lieu of fractional shares of Common Stock of the Company, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common Stock of the
Company. For purposes of this Section 14(b), the current market value of one
share of Common Stock of the Company shall be the closing price of a share of
Common Stock of the Company, or if unavailable, the appropriate alternative
price (in each case, as determined pursuant to Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of that Right
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this Section
14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than rights of action vested in the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock of the
Company), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company), may, in the holder's own behalf and for the holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, the holder's right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have
25
an adequate remedy at law for any breach of this Agreement and shall be entitled
to specific performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
----------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of shares of Common Stock of
the Company;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates contained therein duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
certificate for Common Stock of the Company) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated certificate for
Common Stock of the Company made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be required to
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or by reason of any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the Company
must use all reasonable efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
-----------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock of the Company or any other securities of the Company which may at
any time be issuable upon the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights
26
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, reimbursement for its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
good faith in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock of the Company or
for other securities of the Company or upon any instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust, stock transfer or other shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
but only if such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. If at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and if at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights
27
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and if at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
-----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel to the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including without limitation the identity of any Acquiring Person and
the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the President and Chief Executive Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates, nor shall it be required to verify the same (except as
to its countersignature on such Rights Certificates), but all such statements
and recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereon); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11, Section 13 or Section 24 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate describing any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or
28
warranty as to the authorization or reservation of any shares of Common Stock of
the Company to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock of the Company will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President and Chief Executive Officer, or any
Executive Vice President of the Company and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. 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 by, or omission of, the
Rights Agent under this Agreement and the date on or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date the Company actually receives such application, unless the
Company shall have consented in writing to an earlier date) unless, prior to
taking any such action (or prior to 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 stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company, become pecuniarily interested in any transaction in
which the Company may be interested, contract with or lend money to the Company
or otherwise act as fully and freely as though the Rights Agent were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder (other than internal costs
incurred by the Rights Agent in providing services to the Company in the
ordinary course of its business as Rights Agent) or in the exercise of its
29
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or
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 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock of the Company by registered or certified mail and, if such
resignation occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days' notice in writing mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock of the Company by registered or certified mail and, if such
removal occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
If no successor Rights Agent shall have been appointed within 30 days from the
effectiveness of such removal, resignation or incapacity and no registered
holder of any Rights Certificate has applied pursuant to this Agreement for the
appointment of a new Rights Agent, the Company automatically shall be designated
as successor Rights Agent. Any successor Rights Agent 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 any state of the United States, in good
standing, which is authorized to do business as a banking institution in such
state, is authorized under such laws to exercise corporate trust stock transfer
or shareholder services powers, is subject to supervision or examination by
federal or state authority and 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
shall execute and deliver, if applicable, any further assurance, conveyance, act
or deed necessary for that purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock of the
Company, and shall mail a notice thereof in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or
30
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by the Board to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock of the Company following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock of the Company so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement or upon the exercise, conversion or exchange of securities
hereafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if and to
the extent that the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
(a) The Board may, at its option, at any time prior to the
earlier of (i) the Close of Business on the tenth Business Day (or such
specified or unspecified later date as may be determined by the Board before the
Rights cease being redeemable) following the Stock Acquisition Date (or, if the
Stock Acquisition Date shall have occurred prior to the Record Date, the Close
of Business on the tenth Business Day following the Record Date) or (ii) the
Final Expiration Date, direct the Company to, and if directed, the Company
shall, redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price, as defined in Section 11(d) hereof, of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by the
Board of Directors.
(b) Immediately upon the action of the Board directing the
Company to make the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate, and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board directing the Company
to make the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent
31
and the holders of the then outstanding Rights by mailing such notice to each
record holder of the Common Stock of the Company at the address of such holder
shown on the records of the Company. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange.
--------
(a) The Board may at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In the event that the number of shares of Common Stock
which are authorized by the Company's Restated Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit any exchange of the Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock.
32
In lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of Rights with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the same
fraction of the value of a whole share of Common Stock. For purposes of this
subsection (d), the value of a whole share of Common Stock shall be the closing
price (as determined pursuant to the second sentence of Section 11(d) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Common Stock of the Company or to make any other distribution to the
holders of Common Stock of the Company (other than a regular periodic cash
dividend out of earnings or retained earnings of the Company), (ii) to offer to
the holders of Common Stock of the Company rights or warrants to subscribe for
or to purchase any additional shares of Common Stock of the Company or shares of
stock of any class or any other securities, rights or options, (iii) to effect
any reclassification of the Common Stock of the Company (other than a
reclassification involving only the subdivision or split of outstanding shares
of Common Stock of the Company), (iv) to effect any consolidation, combination
or merger into or with any other Person or Persons (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets, cash flow 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 of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof) or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, combination, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock of the
Company, 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 20 days
prior to the record date for determining holders of the shares of Common Stock
of the Company for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Common
Stock of the Company, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Common Stock of the Company shall be deemed thereafter to refer to, if
appropriate, other securities.
33
Section 26. Notices. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Synergy Financial Group, Inc.
310 North Avenue East
Cranford, New Jersey 07016
Attention: John S. Fiore, President and Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: William P. Tatler, Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of any certificate representing
shares of Common Stock of the Company) shall be sufficiently given or made if
sent by first-class mail, insured, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
--------------------------
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock of the Company. From and after
the Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate offer of the Company which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained herein to the contrary, this Agreement may
not be amended (other than pursuant to clauses (i) or (ii) of the preceding
sentences at a time when the Rights are not redeemable.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
34
Section 29. Determinations and Actions by the Board, etc. For all
-----------------------------------------------
purposes of this Agreement, any calculation of the number of shares of Common
Stock of the Company outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Common
Stock of the Company of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board 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 (a) interpret the provisions of this Agreement and (b)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including without limitation a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including without limitation for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board or the Company in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject the Board or any of the directors on the Board
to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock of the Company) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock of the Company).
Section 31. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth Business Day following the
date of such determination by the Board.
Section 32. Governing Law. This Agreement, each Right and each Rights
-------------
Certificate issued hereunder shall be deemed to be a contract under seal made
under the laws of the State of New Jersey, and for all purposes this Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey applicable to contracts made and to be performed entirely within the
State of New Jersey
35
Section 33. Counterparts. This Agreement may be executed in any number
------------
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
---------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
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.
SYNERGY FINANCIAL GROUP, INC.
/s/John S. Fiore
---------------------------------------------
John S. Fiore
President and Chief Executive Officer
REGISTRAR AND TRANSFER COMPANY,
as Rights Agent
/s/Thomas L. Montrone
---------------------------------------------
Name: Thomas L. Montrone
Title: President and Chief Executive Officer
37
Exhibit A
---------
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER DECEMBER 6, 2014, SUBJECT TO EARLIER REDEMPTION OR
EXPIRATION PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS EVIDENCED BY THIS CERTIFICATE SHALL
NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY
JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE ISSUANCE TO SUCH HOLDER,
OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT
HAVE BEEN OBTAINED OR BE OBTAINABLE. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY
SUCH PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.] *
Rights Certificate
SYNERGY FINANCIAL GROUP, 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 November 23, 2004, as amended, restated, renewed or
extended from time to time (the "Rights Agreement"), between Synergy Financial
Group, Inc. a New Jersey corporation (the "Company"), and Registrar and Transfer
Company (the "Rights Agent"), to purchase from the Company at any time prior to
5:00 P.M. (Eastern time) on December 6, 2014, at the office or offices of the
Rights Agent, or its successors as Rights Agent, designated for such purpose,
one fully paid, nonassessable share of common stock, par value $0.10 per share,
of the Company (the "Common Stock"), at a purchase price of $_____ per share
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and included Certificate duly
completed and executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares
- --------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
A-1
of Common Stock which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
December 6, 2004, based on the Common Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that a number of Rights
be exercised so that only whole shares of Common Stock will be issued.
As more fully set forth in the Rights Agreement, from and after the
first occurrence of a Section 11(a)(ii) Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement), which is
determined to have been involved in or caused or facilitated, directly or
indirectly, such Section 11(a)(ii) Event, (ii) a transferee of such Acquiring
Person (or of any such Associate or Affiliate), or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of such Acquiring
Person (or of any such Associate or Affiliate who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such), such Rights shall
become null and void without any further action, and no holder hereof shall have
any right with respect to such Rights whether under the Rights Agreement or
otherwise.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock or other securities, which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Reference is also made to the Rights Agreement for definitions of capitalized
terms used and not defined herein. Copies of the Rights Agreement are on file at
the above- mentioned office of the Rights Agent and are also available upon
written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per
A-2
Right at any time prior to the earlier of (i) the Close of Business on the tenth
Business Day following the Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement) and (ii) the Final Expiration Date
(as defined in the Rights Agreement).
If the Company so determines, no fractional shares of Common Stock will
be issued upon the exercise of any Right or Rights evidenced hereby, but in lieu
thereof, a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Common 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 withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividend or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ________________
ATTEST: SYNERGY FINANCIAL GROUP, INC.
By: ___________________ By: ___________________________
Secretary Title:
Countersigned:
REGISTRAR AND TRANSFER
COMPANY
By: _________________________
Authorized Signature
A-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED _______________________________________________________
hereby sells, assigns and transfers unto _______________________________________
(Please print name and address
of transferee)
this Rights Certificate, together with all right, title and interest herein, and
does hereby irrevocably constitute and appoint _____________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ___________________, ____
______________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:_________________, ____ ____________________________________________
Signature
Signature Guaranteed:
A-4
NOTICE
------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: SYNERGY FINANCIAL GROUP, INC.
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Rights Certificate to purchase
the shares of Common Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other Person which may be issuable or
such other assets which may be deliverable upon the exercise of the Rights) and
requests that certificates for any such shares or securities be issued in the
name of and delivered to:
Please insert social security
or other identifying number:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:__________________, ____
____________________________________
Signature
Signature Guaranteed:
A-6
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_________________, ____
____________________________________
Signature
Signature Guaranteed:
NOTICE
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The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
A-7
Exhibit B
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SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On November 23, 2004, the Board of Directors of Synergy Financial
Group, Inc. (the "Company") declared a dividend distribution of one Right for
each outstanding share of Company Common Stock to stockholders of record at the
close of business on December 6, 2004. Each Right entitles the registered holder
to purchase from the Company one share of Common Stock on the date of exercise,
at a Purchase Price of $40, subject to adjustment. The terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement") between the Company
and Registrar and Transfer Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 business days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Date") or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of such outstanding shares of Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after December 6,
2004 will contain a notation incorporating the Rights Agreement by reference,
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 6, 2014, unless earlier redeemed or
exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that at any time following the Rights Dividend Declaration
Date, a Person becomes the beneficial owner of 15% or more of the then
outstanding shares of Common Stock, each holder of a Right (other than Rights
held by the party triggering the Rights and certain transferees which are
voided) will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company, subject to certain limitations) having a value equal to two times the
exercise price of the Right. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
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For example, at an exercise price of $40 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $80
worth of Common Stock (or other consideration, as noted above) for $40.
Assuming that the Common Stock had a per share value of $11.07 at such time, the
holder of each valid Right would be entitled to purchase 7.23 shares of Common
Stock for $40.
The Board may, at its option, at any time after a person becomes an
Acquiring Person, exchange all or part of the outstanding Rights (other than
Rights owned by an Acquiring Person, its affiliates, associates or transferees,
which will become void) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right.
In the event that, at any time following the date that any Person
becomes an Acquiring Person, (i) the Company engages in certain mergers or other
business combination transactions or (ii) 50% or more of the Company's assets,
cash flow or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, per Right (subject to
adjustment).
The Purchase Price payable, and the number of shares of Common Stock
(or the number and kind of other securities or property, as the case may be)
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) if
holders of the Common Stock are granted certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends) or of subscription rights or warrants (other than those referred to
above).
No adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. The Company is not
required to issue fractional shares of Common Stock and in lieu thereof an
adjustment in cash will be made. For fractional shares of Common Stock, the
adjustment will be based on the market price of the Common Stock on the last
trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in
part, at any time until ten days following the Stock Acquisition Date, at a
price of $0.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors). Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the
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Rights will terminate and the only right of the holders of Rights will be to
receive the $0.01 per Right redemption price. Until a Right is exercised, the
holder thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for common stock of the acquiring company
as set forth above.
Any of the provisions of the Rights Agreement may be amended prior to
the Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, to make changes which
do not adversely affect the interest of holders of Rights (excluding the
interest of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights are
not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated November
23, 2004. Copies of the Rights Agreement are available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-3